Quote:The risk, IMO, is not of a "cheater" financial institution, but because of a collapse (like WMu).
Originally posted by Cougar
I have another dumb question. What are the risks associates in having a GIC with as such not-so-popular establishments. I mean is there a way i can be sure that the money once put in a GIC will be returned to me upon maturity ? I can trust all these big banks however there are names that are offering great rates but their names are unheard of. Could it be that one could be totally cheated upon and might loose all investment because of cheaters out there.
In that case, the type of insurance would determine whether you get your money back or not.
CDIC is funded by upto 35 bps, one of the lowest among all insurances.
Ontario deposit insurance is funded by over 50 bps.
Some provincial deposit insurances are funded near or above 100% (SK, QC and MN for example).
Reference -
http://www.cdic.ca/multimedia/Website/Documents/ar/en/CDIC_ar08e.pdf
For CDIC insurance, the question becomes whether the Federal Govt. will step in and shore up any shortfall in the event of FI failure.
Chances are high, IMO (given the low coverage ratio of the CDIC), but you can never be 100% certain.
Also, GIC being a debt for the company /should/ have higher claim than bonds, preferred shares, and finally common stock.
But OTOH, it could take months to get your money back.
I can't give you specific advice or recommendations, obviously.
Do some DD around the company (esp. if it is a smaller credit union or smaller lender).
Dig into what kind of insurance covers the deposit and dig around the insurer's website to find past claims and coverage ratio, etc. and make a judgement.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Posts: 1351
Location: Brampton, Ont, Canada
Posted on: 24-06-09 15:12:37
Location: Brampton, Ont, Canada
Posted on: 24-06-09 15:12:37
Hi Patrick
I have been follow your post often and i must say i m really impress..
Finding a financial adviser is no different form finding a doctor.
when i move there i would like to meet u for my financial needs..
such as RRSP, STFA, long term investment etc..
just wondering do u also have some knowledge in Indian market ?
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'Some goals are so worthy, it's glorious even to fail.' (Param Vir Chakra awardee Lt. Manoj Pandey)
Quote:
[Dig into what kind of insurance covers the deposit and dig around the insurer's website to find past claims and coverage ratio, etc. and make a judgement.
Patrick,
Totally appreciate your guidance. Really in detail and great information.
Regards
Quote:
Originally posted by pratickm
Quote:CDIC is funded by all the chartered banks and is backed by the Federal Govt. (it's a Crown Corporation).
Originally posted by web2000
Just a quick question. What difference it makes to have Federal (CDIC) or a Provincial guarantee?
OTOH, the provincial deposit insurances are backed by the provincial governments.
Many people believe that CDIC insurance is much stronger and guaranteed than provincial insurance.
In the event of a big bank failure (and the last federal failure was in 1996 and was not one of the larger banks), it is quite likely the Federal Govt. will step in and gurantee all the insured deposits.
Whether a province will do the same is less likely, although possible.
In Ontario, there have been 15 institutional failures in the last 3 years alone.
Refer -
http://www.cdic.ca/e/insuredWhere/history_failures.html
and
http://www.dico.com/design/1_3_Eng.html
None of this has mattered much in the past, but since these days financial institution failure risk is so high, the validity of the insurance must be questioned and examined.
Just one last question. I have GIC with RBC. Where can I find if my funds are insured by CDIC or not. Is there any online information available or do I have to check with the bank.
Thanks in advance.
Quote:I clicked around their website for a few mins. and couldn't find that information easily.
Originally posted by web2000
Just one last question. I have GIC with RBC. Where can I find if my funds are insured by CDIC or not. Is there any online information available or do I have to check with the bank.
Thanks in advance.
I am almost certain that all GICs by RBC would be insured under CDIC, but for some reason, they are not calling that out clearly on the main pages.
On other websites (like Scotiabank.com, for example), CDIC information is posted on the GIC pages.
I'm sure you can find out the insurance by calling or visiting your branch.
The only exception may be the mixed flavour GICs that combine features of term deposits linked with a market index (so called market-indexed GIC).
It's possible that those GICs are not covered under CDIC, or at the max, only the guaranteed part of it would be covered and not the market linked part of it.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Quote:Hi Blue_Peafowl,
Originally posted by Blue_Peafowl
Hi Patrick
I have been follow your post often and i must say i m really impress..
Finding a financial adviser is no different form finding a doctor.
when i move there i would like to meet u for my financial needs..
such as RRSP, STFA, long term investment etc..
just wondering do u also have some knowledge in Indian market ?
Hey, thanks for the appreciation.
I'm not a financial advisor and wouldn't want to provide any formal "advice".
That said, I'm happy to discuss investing with anyone and bounce off ideas.
Just PM me when you wanna chat.
I don't have any knowledge of Indian market though, sorry.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
