Canada Savings Bond

The Amazing Canada Savings Bond And You

Published Date: July 22, 2010

When you want to build up a good, safe investment for yourself, or you want to save money for a retirement without losing sleep, you should look at the Canada Savings Bond. The Canada Savings Bond is an investment instrument created by the government of Canada and it sells between October and April of every year. Issued through the Bank of Canada, it offers a competitive rate of interest and there is a guaranteed minimum interest rate on it.

Created in 1946 as Victory War Bonds, it was a safe way to invest and to save for Canadians who did not want to use mutual funds. The Victory War Bonds were just one of four different types of bonds that were issued including the Canada – Dominion War Savings Certificate, the Canada Fourth Victory Loan and the Dominion of Canada Victory Loan.

These Canada Savings Bonds became very popular and a great way to invest and they would often be bought for younger children as a gift that they could redeem years down the road. However, lately, bond sales have begun to fall because of the low interest rate environment causing yields to be lower, which means more people are going to stocks and mutual funds in order to get more money for what they are spending. During the 1980s, rates were as high as 18 percent, which yielded big savings, but these days the interest rate has fallen by so much that Canada Savings Bonds held by Canadians were no more than 10 percent of people. In totally, Canada Savings Bonds are worth $19.2 billion in terms of bonds held by Canadians.

There are many types of Canada Savings Bonds that you can buy. These include:

·      Canada Savings Bonds are purchased with regular and compounding interest varieties and you can cash them at any time. They come in denominations of $100, $300, $1,000 and $10,000 with the interest guaranteed for a year and then fluctuating for the remaining nine years until the Savings Bond reaches its maturity date.

·      Canada Premium Bonds are purchased with the same choices in interest as Canada Savings Bonds but they can only be cashed on the anniversary of the issue date, or within 30 days after. Other than that, they are pretty much the same as Canada Savings bonds except the interest rates differ slightly. These bonds are sold with interest rates up to the third each, with each year after having higher interest and the interest rate fluctuates for the remaining seven years depending on the condition of the market until the maturity date is reached.

·      Canada Investment Bonds were available for a time between 2003 and 2004 and are were not redeemable until they matured, and each one had three-year maturities.

There are also several plans that are offered through the Canada Savings Bond, which include:

1.    The Canada RSP, which is a no-fee retirement savings plan that, uses compound interest Canada Premium and Canada Savings Bonds.

2.    The Canada RIF, which is a no-fee retirement income fund that holds Canada Premium and Canada Savings Bonds.

3.    The Payroll Deduction, which is when employees choose how much they can have deducted off their paycheques in order to put into a Canada Savings Bond under the Canada RSP.

In regards to the rates that are used in the Canada Savings Bonds, with the exception of when the rate is fixed at the start of the bond term, the rate is always dictated by the market conditions. An example of this was seen in 2009 when there was a very low rate in the market, which meant that those who purchased the Canada Savings Bonds in that year having very low rates. Low rates mean that your bond is not going to increase in value by much, which is why the Canada Savings Bond market is not doing as well in terms of the number of Canadians buying the bonds.

If you want to withdrawal from your Canada Savings Bond, you can typically do so at any point from most of the big banks within Canada. If you withdraw within three months of issue, you typically will only get the face value of the bond back. What is meant by this is if you have a $10,000 Canada Savings Bond, then you will get $10,000 back. After the first three months, you get the face value plus any interest you have received on the bond. With the Canada Premium Bonds, you can redeem them one year and 30 days after issue, which is important to keep in mind.

You are going to be fully taxed since the Canada Savings Bond is seen as income at your current tax rate. This is why it is a very good idea to take your Canada Savings Bond and hold it in an account that is tax-deferred, like your Registered Retirement Savings Plan.

The Canada Savings Bonds are a very safe way to invest and a good way to build up money that you can use for your retirement. If the Canada Savings Bond grows at the 18 percent per year as was seen in the 1980s, then a $10,000 Canada Savings Bond over that ten years will go from $10,000 to $52,338 by the time the ten years is over. Even at a low of four percent per year, your $10,000 would grow to $14,802.

A safe investment that can also serve as a good gift for someone, the Canada Savings Bond is what you should consider if you are new to investing, or you do not want to invest in the riskier investments of mutual funds and stocks. This way you keep your money growing, albeit at a slower ate, while at the same time increasing your savings using nothing but the interest rate that exists at the time. Look into the Canada Savings Bond and see your savings grow without you having to do anything.

Time To Invest in Stocks?

Should You Invest Now?

Published Date: May 03, 2009

There will be no small number of people looking to save every penny they can get their hands on right now, in the midst of a lending crisis that has permeated even the most disciplined economies in the world. Putting money aside – squirreling would be the best way to put it – is certainly quite tempting as things stand, not knowing when the recovery will really begin in earnest. In order to be sure of having money in the months to come, it is perfectly sensible to put some by. On the other hand it could be said that if you don’t invest a bit now, there will never be a better time.

Sure, there will be some reluctance on the part of any of us to put money where it might lose value, and the fact of the matter is that investing does carry that risk – “remember, investments can go down as well as up” ring any bells for you? Without that kind of fluidity, there would be no chance of making a bit of money on the stock market, or through any kind of investing – and you would be better off just putting it in a savings account. What we can be certain of is that several investments are now at as low a value as most of us can remember – and ripe for the buying cheap.

Award-winning book Invest Now is jam-packed with timely information and timeless advice for the beginning Canadian investor. To purchase a copy, visit Chapters Indigo or buy online – Invest Now: A Canadian’s Guide to Investing

No-one with any knowledge of such matters will tell you that your investment is guaranteed to increase in value, and less still will you be told that you will get an instant return, so it is worth having a savings plan at the same time. The chances are, however, that a small investment will have an initial small return, and can even act as a dry run for investing in greater amounts. As rules of thumb go, “Only invest what you can afford to lose” is a good one. It will allow you to learn the ropes in a less pressurized context.

Of course, investing can be a daunting prospect. If you stand to make any kind of money at all, the chances are that it will carry a frisson of nerves as you watch and wait for the right moment to sell or stay in. The chances are that on your first investment you will be tempted to sell as soon as you realize any kind of profit on the deal. While there is every reason to be happy at turning a profit, it is worth taking into account that people who have been playing the market for longer will stay in longer than those who haven’t. The reason for this is that they have learned to recognize when a stock will keep rising.

It is worth purchasing a guide to investment because these are invariably written by people who have done it and been successful. Warning signs that might go ignored by the novice will be covered in these guides, as will those false alarms that make first time investors panic and get out. When you are investing for the first time, it is good to have this reassurance.

To streamline and minimize blog maintenance, I will be discontinuing maintaining the Canadapersonalfinancewebsite.com website (however, I will still hold the domain). I will gradually move all articles from this site to A Dawn Journal. This article originally published on the above website on May 3, 2009.

One Investment Market That Is Currently Doing Fine

Investment Opportunities Exist Even In A Terrible Market

First Published Date: Feb 22, 2009

As global markets continue to pop like antique light bulbs, the value of some assets is beginning to slide south; even in a country, that has managed its economy as well as Canada. For people with money to spare who are worried that despite the security of Canadian banks their cash will begin to lose its value, it is therefore a tricky situation in which to invest wisely with any measure of confidence. Of course, investment is indispensable for an economy to thrive and grow, and if you’re not satisfied to see interest safely accrue on what you have in the bank then you’ll still be looking around to see where you can invest without having instantly to drop to your knees and pray. You’re not alone.

One investment market that is currently doing just fine is the buy-to-let market. This makes sense if you stop to think about it. With financial uncertainty clouding matters at the moment, renting a home has never been more popular. Fewer people are taking the considerable risk of buying a home, concerned that they might lose their job – particularly if exports begin to tail off as the global economy struggles. This makes it a potentially very profitable time to be a landlord. Real estate prices are falling, so if you have the spending power and the borrowing capability to buy up properties, now is a good time to do so, before doing the necessary work and turning them out on the rental market.

It is at least partly true that where one man is facing a crisis, another spots an opportunity. This may be cruel in some people’s eyes, but someone is always going to be getting rich when other people are having concerns, and when it comes down to it why shouldn’t you be that someone? Another thing to take into account is that property prices will by their very nature increase again at some point, and with senior analysts voicing the belief that the real estate market has bottomed out (or is at least about to) this might just be a fine time to get on the “property ladder”. Intelligent development could pay off in a big way a couple of years down the line.

One word of warning, however. To repeat the final words of the first paragraph, you’re not alone. There are a great many other people looking for an investment opportunity, and where there is a demand for something there will always be someone ready to profit from that demand. That someone will not always be as altruistic as might be hoped.

A competitive market is the ideal breeding ground for scammers and hustlers, and it is important to vet any investment opportunity more than once over before committing. A once in a lifetime, too good to be true opportunity might just be exactly that. Scammers will not always e-mail you pretending to be a retired Nigerian general with millions of dollars to invest – sometimes they’ll look you in the eye and smile at you. If you have doubts, contact the Investment Dealers Association of Canada. They police investment professionals, and there are few scams they haven’t seen.

To streamline and minimize blog maintenance, I will be discontinuing maintaining the Canadapersonalfinancewebsite.com website (however, I will still hold the domain). I will gradually move all articles from this site to A Dawn Journal. This article originally published on the above website on Feb 22, 2009.

Global Real Estate ETFs Take Off

Investors Chasing Global Real Estate ETFs

First Published Date: September 24, 2014

Who would not like the idea of buying global real estate without leaving home? No wonder global real estate ETF investments skyrocketed. As Bloomberg recently reports in an article, investors are gobbling up global real estate companies at a record pace.

According to the Bloomberg article, global real estate ETF the SPDR Dow Jones International Real Estate ETF (RWX) attracted 340 million in August, the most of any ETF that is comprised of property, mainly non-U.S. real estate.

Global real estate demand has dramatically exploded since the global financial crisis as investors started to look for a safe haven to park money and get higher returns.

As I mentioned in this article on A Dawn Journal in March, 2014, a PwC report mentioned that the global real market will grow substantially in the future due to rapid urbanization and demographic changes.

If you are looking for some global real estate ETFs, here are some places to start with your research. The iShares Global Real Estate (CGR) is a popular name trading on the Canadian exchange. On the U.S. exchanges there are SPDR DJ International Real Estate (RWX), SPDR DJ Global Real Estate (RWO), and Vanguard Global ex-U.S. Real Estate ETF (VNQI), among others.

Like any other investments, global real estate ETFs are subject to various risks such as market risk, currency risk, interest rate risk, credit risk, and so on. Also, do your homework before getting into any investments.

Finding Dividend ETFs Beyond Canadian Borders

Three Global High Dividend ETFs

First Published Date: February 2, 2014 ADawnJournal.com

As the pages fall from the calendar and time spins inexorably on, dividend investors step up their quest for dividend ETFs further beyond Canadian borders. Today, I will talk about three dividend ETFs that are trading outside Canada and holding high yield stocks around the globe.

SDIV – Global X SuperDividend ETF MER 0.58% – SDIV tracks 100 diversified high dividend paying companies across the globe, including the US, but with a lesser concentration on the emerging markets. If a company cuts its dividend, SDIV gets rid of that company at the next quarterly review. As of this writing, 12-month dividend yield is 7.22%.

DWX – SPDR S&P International Dividend ETF MER 0.45% – DWX tracks 100 high dividend mid-cap companies across the globe, excluding the US, but with a higher concentration on the Australian market. Yield is 6.61%.

DOO – WisdomTree International Dividend ex-Financials ETF MER 0.58% – DOO tracks 92 large and mid-cap companies across the globe, excluding the financial sector, with a higher concentration on the UK market and lesser concentration on the US market. Yield is 2.73%.

There are many other high-dividend global ETFs trading on the US exchanges. High yield comes with high risks. Do your homework before making any investment decisions.

Disclosure – This article is for information purposes only and No information is intended as investment, tax, accounting or legal advice, or as an offer to sell or buy or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security, ETF, or fund. The author assumes no liability for any inaccurate, delayed or incomplete information, nor for any actions taken in reliance thereon. You bear responsibility for your own investment research and decisions, and should seek the advice of a qualified financial professional before making any investment decision. As of this writing, I do not own any of the ETFs mentioned here.