Investment

[afransen]

ING Direct is offering 2.25% for Tax Free 3 yr GICs. If you're feeling more adventurous (though not necessarily much riskier), set up a Tax Free Trading Account with a discount broker like Questrade, and buy a bond ETF, such as XGB (an index of government bonds) or XSB (an index of short-term bonds), which pays about 4% per year, compounding quarterly. The value of XGB does not vary very much, but you wont know exactly what your return will be like you would with a GIC.

 

[kEiThZ]

Nice Idea, but what guarantees that US will rise to that level, wht if it went further down

Nothing guarantees a return in the stockmarket either. But given that our currency has essentially become a petrodollar that's not a bad investment bet.

 

[afransen]

I wouldn't recommend currency speculation as a 3 year investment.

 

[kEiThZ]

I wouldn't recommend currency speculation as a 3 year investment.

True enough....didn't see his timeframe.

 

[beaconer]

I'm definitely biased, as I am more a market bear (I generally believe that the era of US consumption as the main global economic driver is over) , but I'd make the inflation/commodity play if you are willing to wait 3 years..

 

[Whoaccio]

Forex for a long term retail investor is idiotic.

I don't think a GIC is a good idea. You won't be able to get more than 2-2.5% return. If you have outstanding debt (say, OSAP) it would make more sense to repay that then buy GICs as it will have a better return. I don't know your requirements, but many of the higher yield GICs aren't redeemable until maturity or only on certain dates, which may be problematic for you. If you are fairly confident you wont need them redeemed until a set future date that isn't an issue, but you should be aware of that.

I think you mentioned earlier that you wanted to focus on growth as opposed to income, so to that end some kind of equity ETF would seem appropriate. First pick three or four sectors you think will perform well. You get a lot of choice here; infrastructure, financial, energy(oil patch) and US largecap seem prudent for the sake of discussion. If you were really risk averse the leveraged ETFs probably wouldn't be a good idea, but having ~25% of leveraged could be worth considering. I would recommend equity ETFs over bond ETFs as I think interest rates will stay flat or rise over the next 3 years. I'm also not sure I see the point in paying management fees to hold savings bonds.

 

[afransen]

He/she basically said that they could not tolerate any downside risk. As a result, relatively safe bonds are the way to go. GICs offer poor rate of return, which is why I suggested bond ETFs.

 

[Whoaccio]

I don't want to put words in Seesus' mouth, but I guess I'm wondering if he/she actually can't tolerate risk or, like most sensible people, is just risk averse. If it is the former than I guess some kind of bond fund would be prudent, but if it was the later it would probably be wise to have an equity component given current interest rates. Most portfolios should have some equity component, it is a question of weighting.

 

[urbandreamer]

Take a look at BQI:

L-T target: $5-$10

Good to own a few thousand of these shares, so take 1/3 of your $10,000. Split your $10k three ways--stocks, bonds, and cash (or gold.)

 

[Seesus]

Take a look at BQI:

L-T target: $5-$10

Good to own a few thousand of these shares, so take 1/3 of your $10,000. Split your $10k three ways--stocks, bonds, and cash (or gold.)

Thank you everyone for your careful suggestions, I am more risk averse and dont want to go there for the next three years with the amount thats in question, I guess GIC would be the only low return safest way to carry the money. I also think i am leaning towards the way urbandreamer has suggested to break down into gold cash bonds .. fantastic feedback folks .. much appreciated.

 

[afransen]

I wanted to say that what urbandreamer described could be in no way characterized as low risk. BQI is a small oilsands firm--if you wanted something 'safe' in that space, invest in Suncor or CNQ.

But really, I would recommend investing in government bonds that yield basically double what GICs do.

 

[lead82]

I would take a bank gic over a bond, since govt bonds tend to be only redeemable once or twice a year. Gic rates are best for 5 year terms. 3 yr you may get 3%

 

[afransen]

Bond ETFs are liquid and can be traded daily.

 

[Seesus]

I would take a bank gic over a bond, since govt bonds tend to be only redeemable once or twice a year. Gic rates are best for 5 year terms. 3 yr you may get 3%

most of the banks are offering only upto 2.5 % (HSBC) - which insitiutions are offering upto 3 %? would be keen to know thanks

 

[lead82]

ing is offering 3% for a tfsa, but for a gic, you need to go to your bank and try to negotiate 3% for a 3 year gic.