Personal Finance

RRSP contribution: Best interest rate right now? (1-5 years)

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  • Mar 4th, 2019 10:23 pm
Newbie
Feb 22, 2019
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RRSP contribution: Best interest rate right now? (1-5 years)

With deadline fast approaching i need to pick somewhere to park my RRSP money, aside from the stock market, what are some good options?

Considering a 3.00% 19-Month term deposit from capital coast, any better options?
16 replies
Deal Addict
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Nov 18, 2007
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Corktown
Tangerine. 6 month - 2.7%, 1 year - 3.0%.

If you are a new client, you will get 3.0% for first 6 months.
Deal Addict
Dec 15, 2009
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Ontario
Copower bonds offer 4% for 4 years and 5% for 6 years
Deal Expert
May 30, 2005
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Richmond Hill
Something to consider is what's your long term goal for the money? If you're looking to eventually invest it in funds/stocks, it might not make sense to put it temporarily in a GIC/savings account because the transfer fees will eat up any interest you've earned in the meantime. Might as well put it in the final destination (brokerage account, etc.) earning 0% interest if that's where it'll be going eventually. This is assuming it's not a big amount, of course, because RRSP's contribution room is limited.
Tons of things for sale!
Silver Coins and Numismatics | Heatware
Newbie
Feb 22, 2019
18 posts
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Jon Lai wrote: Something to consider is what's your long term goal for the money? If you're looking to eventually invest it in funds/stocks, it might not make sense to put it temporarily in a GIC/savings account because the transfer fees will eat up any interest you've earned in the meantime. Might as well put it in the final destination (brokerage account, etc.) earning 0% interest if that's where it'll be going eventually. This is assuming it's not a big amount, of course, because RRSP's contribution room is limited.
a short term (1 year or so) GIC is surely better than 0%, right?
Deal Expert
May 30, 2005
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Richmond Hill
jaweivo wrote: a short term (1 year or so) GIC is surely better than 0%, right?
Depends on how much $ and the interest, you’ll have to do the math.

$1k at 3% = $30, with transfer fees at $50 or more, probably not worth it. 3% is on the higher side as well. If you’re looking at deploying capital less than a year, that also affects the payout.

Personally if the cash is waiting for a dip in the market, I would rather just put it into a brokerage account, ready for deployment anytime.
Tons of things for sale!
Silver Coins and Numismatics | Heatware
Member
Jul 2, 2015
262 posts
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OTTAWA,ON
Jon Lai wrote: Something to consider is what's your long term goal for the money? If you're looking to eventually invest it in funds/stocks, it might not make sense to put it temporarily in a GIC/savings account because the transfer fees will eat up any interest you've earned in the meantime. Might as well put it in the final destination (brokerage account, etc.) earning 0% interest if that's where it'll be going eventually. This is assuming it's not a big amount, of course, because RRSP's contribution room is limited.
Pretty hard to get 0% in your brokerage account unless you don't really care about your money. All major brokerages have a hi interest account available presently paying 1.6%.

Not great but you have access to your funds in 24 hours, if needed.
Deal Fanatic
Jan 18, 2003
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Mississauga
Jon Lai wrote: Something to consider is what's your long term goal for the money? If you're looking to eventually invest it in funds/stocks, it might not make sense to put it temporarily in a GIC/savings account because the transfer fees will eat up any interest you've earned in the meantime. Might as well put it in the final destination (brokerage account, etc.) earning 0% interest if that's where it'll be going eventually. This is assuming it's not a big amount, of course, because RRSP's contribution room is limited.
some brokerage will pay for the transfer fees...
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Jan 4, 2009
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on the links!
jaweivo wrote: Considering a 3.00% 19-Month term deposit from capital coast, any better options?
If that's your timeline, then Oaken is better...18 mths @ 3.30%
Deal Addict
Dec 15, 2009
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Ontario
Sauerkraut wrote: If that's your timeline, then Oaken is better...18 mths @ 3.30%
Thread title says 1 to 5 years. Quite a range
Deal Addict
Mar 16, 2018
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Hamilton
What's your concern about investing in equities, lack of time to plan? You could push cash into an RRSP account in a brokerage and let that money sit while you figure out a real long term investment. You don't have to rush any purchases, but signing up for a bank product right now is just letting them play the market with your money because you failed to plan ahead. Is 5 years when you need to pull the money out or is that maximum tolerance for a GIC?
Deal Addict
Jan 16, 2016
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Hamilton, ON
The better question is why aren't you considering stocks? If you're young your investment goals should be aggressive or extremely aggressive; I would only ever recommend someone use a GIC for their RRSP if they're in their 60s any actually need the money in the next few years.
Newbie
Feb 22, 2019
18 posts
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ownthesky wrote: What's your concern about investing in equities, lack of time to plan? You could push cash into an RRSP account in a brokerage and let that money sit while you figure out a real long term investment. You don't have to rush any purchases, but signing up for a bank product right now is just letting them play the market with your money because you failed to plan ahead. Is 5 years when you need to pull the money out or is that maximum tolerance for a GIC?
Altera wrote: The better question is why aren't you considering stocks? If you're young your investment goals should be aggressive or extremely aggressive; I would only ever recommend someone use a GIC for their RRSP if they're in their 60s any actually need the money in the next few years.
I do have money in stocks (about 50% of my net worth). At this moment it seems a bit reckless to add more money into stocks with the stock market being as overheated as it is, and it's unprecedented bull market. All good things must come to an end (I'm even considering dropping my stocks from 50 to 30%, although I've yet to make a decision)
Newbie
Feb 22, 2019
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Yes, you can say it's timing the market, but i'm looking to only add more money in stocks after a decent correction to get a more reasonable price.
Deal Addict
Jan 16, 2016
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Hamilton, ON
jaweivo wrote: I do have money in stocks (about 50% of my net worth). At this moment it seems a bit reckless to add more money into stocks with the stock market being as overheated as it is, and it's unprecedented bull market. All good things must come to an end (I'm even considering dropping my stocks from 50 to 30%, although I've yet to make a decision)
Buy indices (S&P 500, Nasdaq 100, TSX 60 etc.) and ETFs/Mutual Funds which track certain indices, not stocks. This helps distribute your risk over a multitude of securities as opposed to a few select ones you have chosen.
Newbie
Feb 22, 2019
18 posts
3 upvotes
Altera wrote: Buy indices (S&P 500, Nasdaq 100, TSX 60 etc.) and ETFs/Mutual Funds which track certain indices, not stocks. This helps distribute your risk over a multitude of securities as opposed to a few select ones you have chosen.
yea, most of my "stock" investments are actually in ETFs. But in a crash the whole index goes down, so that's my current thinking. If i was more sophisticated i'd probably hedge with some put options, but i don't want to play with fire.

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