Comments on: This and That http://www.canadiancapitalist.com/this-and-that-36/ Helping you invest and prosper Sat, 11 Feb 2012 12:40:17 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Phil S http://www.canadiancapitalist.com/this-and-that-36/#comment-22549 Phil S Sat, 03 Mar 2007 13:18:42 +0000 http://www.canadiancapitalist.com/2007/03/02/this-and-that-36#comment-22549 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. 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.

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/this-and-that-36/#comment-22450 Canadian Capitalist Fri, 02 Mar 2007 16:52:54 +0000 http://www.canadiancapitalist.com/2007/03/02/this-and-that-36#comment-22450 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? 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?

]]> By: Mike http://www.canadiancapitalist.com/this-and-that-36/#comment-22446 Mike Fri, 02 Mar 2007 16:42:41 +0000 http://www.canadiancapitalist.com/2007/03/02/this-and-that-36#comment-22446 Mark - just flip a coin and move on. Mark – just flip a coin and move on.

]]> By: Mark http://www.canadiancapitalist.com/this-and-that-36/#comment-22429 Mark Fri, 02 Mar 2007 15:17:29 +0000 http://www.canadiancapitalist.com/2007/03/02/this-and-that-36#comment-22429 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 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

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