Archive for May, 2007

This and That

May 31, 2007

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  1. It is heartening to see that Canada’s world-beating mutual fund fees are falling. Rob Carrick writes in The Globe and Mail that RBC Direct Investing is planning to give DIY investors a significant break in the trailer fees on Royal Bank’s in-house funds. The fee reduction will be worth as much as 90 bps on some equity funds.
  2. Canadian Financial DIY shows why investors having an unhedged exposure to an international fund like the EFA, are not affected by the currency fluctuations between the CAD and USD.
  3. Standard & Poor’s explains why investors should invest in foreign equities even if markets are highly correlated.
  4. As mortgage rates start to creep up, here’s some good advice from Canadian Mortgage Trends: Plan Early for Mortgage Renewals.
  5. SteadyHand’s Tom Bradley wonders what could derail the current multi-year bull market.
  6. The Star’s Ellen Roseman offers tips for navigating travel insurance waters.

Interest Rates Are Going Up

May 30, 2007

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After keeping interest rates steady for just over a year, the Bank of Canada has clearly hinted that interest rates will be going up in the near future:

On balance, the Bank judges that there is an increased risk that future inflation will persist above the 2 per cent inflation target and that some increase in the target for the overnight rate may be required in the near term to bring inflation back to the target.

The prime rate, which is currently at 6% and moves in lockstep with the Bank’s overnight lending rate, will also likely be heading higher this summer. Consumers can expect to pay more interest on loans and variable rate mortgages.

Yields are also rising in the bond markets. The yield on 5-year bonds has risen from 4.01% at the beginning of this quarter to its current level of 4.54%. The interest rate on fixed-term mortgages, which are tied to bond market yields have also been inching up of late. Consumers whose mortgages are coming up for renewal will be paying more than they would have just one month back.

TD Bank’s iPod Offer

May 30, 2007

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TD Canada Trust (TSX: TD) is hoping to attract retail banking customers by offering free iPods. Customers could qualify for one of three offers: a 1GB iPod shuffle (retail value: $89.99), a 2GB iPod Nano (retail value: $164.99) or a 30GB iPod (retail value: $299.95).

The 30GB iPod offer isn’t all that attractive when you consider that you are required to get a Visa card with an annual fee of at least $99. I don’t have a TD Chequing account and it is tempting to take up TD on its offer of an iPod Nano, which you can get by:

  1. Opening a chequing account. Monthly fees of $3.95 are waived for a Value Account, if a balance of $1,000 is maintained.
  2. Transferring your checking account using TD’s EasySwitch and setting up two pre-authorized debit payments.
  3. Deposit $5,000 into a GIC account. The money is required to remain in the account for 90 days.

For an “investment” of $1,000 and receiving a slightly reduced interest on a $5,000 investment, you can get an iPod Nano worth $190. Like I said, very tempting!