Earn up to 10.00% with a 3-year Market Growth GIC*.

  • Last Updated:
  • Jan 23rd, 2017 3:52 pm
Deal Addict
May 15, 2013
1750 posts

Earn up to 10.00% with a 3-year Market Growth GIC*.

I received this targeted email from TD, any thoughts?

Dear ..............,

With RSP season in full swing, we know that you are thinking about your future and the best way to save for it. Purchase our 3-year TD Canadian Banking & Utilities GIC* to help reach your saving goals.

Don't forget, the RSP contribution deadline is March 1, 2017.

Benefits of investing in a 3-year TD Canadian Banking & Utilities GIC*:

Earn up to 10.00% on a 3-year term with a guaranteed minimum interest return.
Enjoy the potential of higher returns with no risk to your principal, no matter which way the markets move.
Pay no fees whatsoever
to invest in a GIC.
Invest in non-registered and registered accounts, such as RSPs and TFSAs.
8 replies
User avatar
Feb 26, 2008
477 posts
10% over 3 years. Isn't that like 3.2% annualized?
Jun 25, 2013
33 posts
My thoughts: this is garbage for the client and money in the bank for TD. Good for TD shareholders I guess if they get enough clients to sign up for this. From the fine print:

"*Return linked to market index performance. Maximum return of 10.00% and Guaranteed Minimum Return of 0.25% are over the entire 3-year term. "

So if markets are good, I get max 10%, and TD makes off with who knows how much more - oh goodie!!
but wait, if markets get bad at least I get 0.25% risk free.. My lowest HISA pays 3x that amount and its liquid

To be fair, the advantage is that its "risk-free" and the principle is guaranteed. That option has to come at a cost, if that is what you're looking for - you give up some gain to keep your principle secure. Maybe you can stick this is a GIC ladder to help boost your returns in that regard..

I would bet that you'd made more investing in TD common shares, or a broad ETF assuming market rises or stays flat and you'd still make more getting a non-market linked GIC if markets were to tank.
Last edited by Barrakuda on Jan 20th, 2017 1:21 am, edited 1 time in total.
Deal Addict
Dec 22, 2008
2174 posts
we know this is a bad idea for long term but for short-term investing (is saving up for something 5 years from now) what do people think?
Jun 25, 2013
33 posts
I was pretty harsh in my comment in regards to this product, but I have a hard time feeling comfortable with this.

If you're saving up for something in 5 years, you could get a 5 year GIC ( at ~1.5%-2.25%) guaranteed from other banks
Use a market-linked GIC and get anywhere between 0.25%-10%.

problem with market-linked that I see is if the markets suddenly take a tumble 2.5 years after you bought the GIC, you get your principle back, but who knows how much your interest rate will be now...

Oh and keep this product in a registered account; I think a GIC like this will shoot off interest income and not dividend income.
Deal Addict
User avatar
Aug 1, 2007
1417 posts
Yes, the growth will be considered interest income. Also note that the performance with these products are almost always based on the price return only which excludes dividends, a pretty important part of the typical return for these stocks.
Deal Fanatic
Jul 1, 2007
8460 posts
Take it from someone who used to sell these products: They're garbage and not appropriate for any investor or investment goal. It's just a way for the bank to borrow money off you cheaply and for the salespeople at the bank to make more "sales revenue" (SR) than if they sold a regular 3 or 5 year GIC.

I used to get myself into trouble with management when, after the regional sales manager for investments left the branch after doing their spiel on these, I'd tell the sales reps that the product is completely wrong and warned them that if clients referred to me have these GICs in their portfolio I'll straight up tell them that they're wrong and that might make the sales rep look bad.

One of the biggest issues that doesn't get discussed enough is the fact that the bank specifically pushes either their "banks & utilities" or their banks/financials or utilities GICs. These specifically are indices where half or more than half of the long-term return comes from dividends, and dividends are completely excluded from the GIC's return calculation. So, if the Utilities GIC has a 30% maximum return over 5 years (not sure what it is currently, but this one always had the highest limit), and the total return of the Utilities index is 40% over that time, you would still end up with a GIC return well below 30% because the index went up much less.
Money Smarts Blog wrote: I agree with the previous posters, especially Thalo. {And} Thalo's advice is spot on.
Deal Fanatic
User avatar
Jun 19, 2009
5991 posts
It's hard to explain to other people why it's not a good investment - They think they're getting the best of both worlds (GIC's safety with the upside of equities) but it turns out it gimps both aspects and you end up with an inferior product that erodes your returns. Not to mention you usually get even lower than expected due to the nature of their stated returns not being annualized which makes it even worse.
Deal Fanatic
May 22, 2003
5588 posts
Yeah, I bought one of these as my first investments long time ago when I was 19 or 20. I hit the max gain of 10% over 3 years and I was so happy, until I found out that the index it was tracking was up 35% lol.