If bank like Home/Oaken/EQ goes broke... CDIC insurance, tax loss, compound interest, et al topics
This thread has been spun out of the The EQ Bank Savings Account thread thread (from around here if you need more context.)
And worst case, a 5-year compounding interest GIC in a taxable account: You could lose up to 5 years' worth of interest. (At 3%/year that's well over $15k on a $100k GIC.) But worse, you'd have been paying income tax on each year's interest as it accrued--even if you never got any of it.
The real issue is with GICs. With HISAs, if you transfer the excess out as suggested, then your risk is at most one month's interest. But if you have a GIC you're leaving up to a year's worth of interest uninsured.
And worst case, a 5-year compounding interest GIC in a taxable account: You could lose up to 5 years' worth of interest. (At 3%/year that's well over $15k on a $100k GIC.) But worse, you'd have been paying income tax on each year's interest as it accrued--even if you never got any of it.
Last edited by bylo on May 31st, 2017 1:05 pm, edited 2 times in total.
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