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This and That

March 2nd, 2007 · 4 Comments

  1. Rob Carrick reminds investors to rebalance their portfolios in the wake of the sharp market correction this week.
  2. Larry MacDonald points out two potential pitfalls to be aware of when getting exposure to foreign equities inside RRSPs.
  3. Paul Farrell writes in MarketWatch.com about an 8-year old’s lazy portfolio composed of just three broad-market index funds that handily beat the S&P 500 over the past 10 years.
  4. The Growth in Value blog just celebrated its first anniversary.

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4 responses so far ↓

  • 1 Mark // Mar 2, 2007 at 11:17 am

    Hi,

    I have a questions for all the readers. I have a small portion of my RSP in a GIC and I need to renew it in few days. Since I don’t think the Bank of Canada will increase the interest rate this year (they may keep it neutral or decrease it of .25%) should I take a 2-year term at 3.85% or take a risk for a 1-year term at 4.00% (ING Direct)

    Thank you

  • 2 Mike // Mar 2, 2007 at 12:42 pm

    Mark - just flip a coin and move on.

  • 3 Canadian Capitalist // Mar 2, 2007 at 12:52 pm

    Mark: I’ll agree with Mike. It is impossible to predict which one is the better option. Also, keep in mind that 1-year, 2-year GIC rates are based on corresponding bond yields which are market-driven, so who knows?

  • 4 Phil S // Mar 3, 2007 at 9:18 am

    The yield curve is basically almost flat right now. A 1-yr T-Bill is at roughly 3.5% and a 30-yr government bond is just under 5%. So, there is absolutely no incentive to “lock in” to any terms longer than 1-yr, in my opinion.
    For disclosure, I’ve only been buying 1-yr T-Bills and 30-day cashable GICs. With those highly liquid securities, I can move quickly if I feel that the stock market has hit “rock bottom” or if the government gets kicked out and a new one reinstates income trusts (wishful thinking) or whatever else might happen. If none of these scenarios happen, then I will collect about 3.8% interest over the next year. I am currently 40% cash & short term securities and 60% equity including some income trusts (which I’m watching get pounded right now). Ironically, the income trusts aren’t getting pounded nearly as hard as my ordinary equities. I guess the government already took all of the air out of that balloon and so it can’t fall any further.

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