Over the past few weeks, my wife and I decided that we desperately needed to renovate our upstairs bathroom in the next few months. But when would be the optimal time do so given our schedules and cash flow situation? During our weekend tradition of discussing plans over a nice meal and a couple glasses of red wine, the ultimate decision that transpired was to go ahead with the project ASAP.

From that point onward, I was curious about the possibility of saving money with some of the expenses. After flipping through the November/December 2009 Canadian MoneySaver magazine, I quickly noticed Bruce Ball's article, "Some Yearend Tax Planning Ideas". In it, Ball asks readers whether or not if you have made full use of the home renovation credit.

Essentially, Ball states "you need to consider whether you have taken full advantage of it before it disappears on February 1, 2010." Personally, I had heard of the renovation credit on numerous occasions over the past year; however, I had no idea that the credit was going to disappear in 2010.

The article also mentions how expenditures for renovations/alterations to one's home "that are of an enduring nature" can qualify.  Crucially, Ball also states, "the key will be to get planned work don (or goods purchased) by January 31, 2010.

The immediate response to this entailed me asking, "would my bathroom renovation qualify for this credit?"

The next logical step in the process to find out the truth to the matter was to simply read up on information provided by the Canada Revenue Agency (CRA).

After checking out the CRA website, it is spelled out that this credit is indeed only available for the 2009 tax year. In addition, the "HRTC applies to eligible expenses of more than $1,000, but not more than $10,000, resulting in a maximum non-refundable tax credit of $1,350 [($10,000 − $1,000) × 15%]."

Fortunately, I was able to find out if our bathroom project would qualify for the credit. The following is a list of examples of eligible expenses as per CRA:

• Renovating a kitchen, bathroom, or basement
• Windows and doors
• New flooring - carpet, linoleum, hardwood, floating laminate, etc.
• New furnace, woodstove, boiler, fireplace, water softener, water heater, or oil tank
• Permanent home ventilation systems  
• Central air conditioner
• Permanent reverse osmosis systems
• Septic systems
• Wells
• Electrical wiring in the home (e.g., changing from 100 amp to 200 amp service)
• Home security system (monthly fees do not qualify)
• Solar panels and solar panel trackers
• Painting the interior or exterior of a house
• Building an addition, garage, deck, garden/storage shed, or fence
• Re-shingling a roof
• A new driveway or resurfacing a driveway
• Exterior shutters and awnings
• Permanent swimming pools (in ground and above ground)
• Permanent hot tub and installation costs
• Pool liners
• Solar heaters and heat pumps for pools (does not include solar blankets)
• Landscaping: new sod, perennial shrubs and flowers, trees, large rocks, permanent garden lighting, permanent water fountain, permanent ponds, large permanent garden ornaments
• Retaining wall
• Associated costs such as installation, building plans, permits, professional services, equipment rentals, and incidental expenses
• Fixtures - blinds, shades, shutters, lights, ceiling fans, etc.

One important aspect of the credit to be aware of is whether or not you hire a contractor or do the work yourself. Be sure to check out the details surrounding this on the CRA website.

At any rate, I was certainly pleased to see that our project would be eligible for the tax credit. As soon as that component was confirmed, I then proceeded to call our carpenter we will be hiring for the job and asked him if was still feasible to finish the job prior to February 1, 2010. He indicated that this would not be a problem.

As a result, we will be able to save a few hundred dollars of our hard earned money on the project. Do you have any renovations that you are considering to have done in the near future? If so, it may be advantageous for you to have them done in the weeks to come in order to take advantage of the credit.

Cheers,

The Rat

In it I mentioned some of the more lucrative rates presently being offered in Canada by Ally and ResMore Trust Company, a CDIC Member. Using a 5-year term GIC as an example, Ally was offering 3.60% while ResMore Trust Company was offering 3.35%.

The point of contention in the post was whether or not Ally's GIC would be protected by CDIC. True, their recent ads, which have been noticeable in many newspapers and leading personal finance magazines, claim good rates, but mention the following: "Ally, a product of ResMore Trust Company. Member CDIC." Does this mean that an Ally GIC would be protected up to $100,000?

Well, finding the answer to that crucial question has not been an easy one for me. After sending off e-mails, calling, and leaving messages, it was getting to the point where I thought I would not be able to get a hold of anybody to get the answer to this question.

Finally, I received a call. The Ally representative informed me that the Ally GIC would be protected indirectly through ResMore Trust Company despite the fact that it would be an Ally GIC. Take that as you like, but at least I was satisfied in a sense that I received an official response.

At any rate, since the first post, things have changed regarding the ResMore rates. As of my last verification, ResMore is now offering a 5-year term rate of 3.00% - down by almost a full half of a percentage point.

Not being satisfied with the above-mentioned, I decided to refer back to one of my key 'GIC books' in my personal finance collection titled, "Enough Bull" by David Trahair. I actually published a book review on Enough Bull in October, and recently bumped up the rating I gave it from a B+ to an A simply because I find myself referring back to it on a regular basis. The new rating gave it the justice it deserved (in my view).

After browsing through the book once again, I noticed an interesting section discussing secrets on finding the best rates out there, and Trahair mentions quite clearly, "when purchasing GICs and other guaranteed investments through a deposit broker, you don't pay fees or commissions to your broker." That's because deposit brokers get paid by receiving a "finder's fee directly from the institutions that they purchase GICs from." This is definitely a stark contrast in comparison to the process of purchasing mutual funds, isn't it?

Ironically enough, the November 2009 edition of Money Sense magazine has an article titled, "Boost Your GIC Returns", and Dan Bortolotti highlights an interesting site (www.GICBroker.com) where you can enlist the assistance of a broker to find some of the best rates in the country. Taking a quick look, there are some 5-year terms presently offering 3.35%. This could be a worthy avenue of pursuit for you to look into a bit further if you're looking for good rates. Keep in mind, a simple 1% increase in rate can make a big different in the interest you earn!

One thing Trahair mentions and is important to remember is that not all deposit brokers are registered members of the Registered Deposit Brokers Association (RDBA). If this is happens to be the case with a potential broker, you must realize that "not all deposit brokers are registered members of the RDBA and bound by its policies and procedures and code of ethics."

An interesting site you may want to visit, which is also recommended by Trahair, is the Fiscal Agents Financial Services Group. They are registered with the RDBA and are an official deposit broker.  What's great about this group is that the company prepares a summary chart for their respective clients listing financial institutions' rates and whether they are insured by CDIC. This could be a great site to check out if you are looking for some of the best rates in the country.

This concludes Part II of the Great GIC Rates mini-series; I hope you enjoyed it!

The Rat

1. You must post a comment on this thread. (only one entry per person)

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Note: Once announced, the winner will have to provide The Rat a valid e-mail address. He or she will be contacted for the shipping address to which the book will be sent. Contest is for shipping to Canada and U.S. only. Draw will be made on Friday, November 27, 2009.

Good luck!

Now for the book. Feast your eyes on Peter D. Schiff's most recent gem titled, "The Little Book of Bull Moves in Bear Markets." Schiff is "President of Euro Pacific Capital, Inc., and one of the few unbiased investment advisors to have predicted the current bear market and positioned his clients accordingly. Schiff appears frequently on Fox News, Fox Business News, CNN, CNBC, and Bloomberg TV, and has been quoted in such publications as the Wall Street Journal, Barron''s, the Financial Times, and the New York Times. He is also the author of Crash Proof, which is published by Wiley."

Wiley has a long history of publishing books in a wide range of subjects; books about building wealth and investing are no exception. The following details regarding the book originate from the publisher:

In that same article, I also mentioned that for all investments combined in my RRSPs, the net performance of my plan has provided me a rate of return of 8.8% since July 1, 2009, and for the past one year period, the overall rate of return has been 3.2%.

Things have certainly changed since I published that post. The first move I made a few weeks ago involved me changing my investment instructions on a go-forward basis to purchase exclusively 5-year Manulife GIAs. The current rate I am receiving for this term is 3.35%.

This week, I decided to take things a step further and assess the value of the funds I have in my RRSP account with Manulife. It turned out that the value of my funds (other than the GIAs I have been recently purchasing) amounted to around $27,700.

Regarding the overall performance of these funds since my last thread, the net performance of my plan has provided me a rate of return of 6.8% since July 1, 2009, and for the past one year period, the overall rate of return has been 11.6%. Essentially, my rate of return since July 1, 2009 had gone down by about 2%, while the rate of return for the past one year increased by about 8.4%.

My thought process that followed was: "maybe now is a good enough time as any to cash these funds out and transfer them into GIAs while the going is good?" I was compelled to look at this possibility more seriously because I really have not been overly satisfied with the performance of my fund selection.

Just to shed some light on the matter, by looking back at the 3-year performance of my fund selection, it sat at an astounding -3.1% (note the sarcasm), and the performance of the funds since 2006 proved to be a 'staggering' -0.9%. What did I have to lose? 

Furthermore, after reading an article earlier this week titled, "From Rich to Ruin" in the November 2009 MoneySense magazine, it really hit home how easy it is to lose out 'big time' by having all your RRSPs in a bunch of funds that are not performing. The article highlights a family (the Rossis), who had $314,000 worth of RRSPs, only to lose over 40% of their value over the past year's financial collapse. True, the majority of the funds the family had selected were likely mutual funds having high MERs, and what's even more disturbing is that "their adviser put them in aggressive mutual funds that are invested almost entirely in equities." When you read about one of the family members stating, "I would have been happier had we buried our money in a mason jar in the backyard", you realize that something terrible has happened.

Fortunately, my Asset Allocation (see previous post) forces me to have adequate safety and a comfort zone that meets my needs. But this is not what I am mainly discussing here; what's being considered is strictly the management of my RRSP investments. By having to pay out MERs, as well as having to cope with all of the factors that come into play when the markets hit a hurricane as we have all witnessed over the past year or so, its no wonder how people lose so much of their savings value. I even had to wait it out with my funds, so that they reached more attractive levels.

As a result of the aforementioned, I decided earlier this week to transfer all of the $27,000 worth of funds into 4-year and 3-year GIAs, as I felt they would complement the present contribution instructions of 5-year GIAs for future contributions.

If I could take it all back regarding the comments I made on Million Dollar's Journey thread titled, "TFSAs, Self Control and Your Future Self" (the post was written by Kathryn) back on October 1, 2009 I would. My perspective and attitude towards RRSPs have dramatically changed since then.

After reading the book "Enough Bull: How to Retire Well Without The Stock Market, Mutual Funds, or Even An Investment Advisor" (I did a book review on the post of October 29, 2009), I came to realization that RRSPs (and TFSAs) will become a crucial component of my investment strategy on a go-forward basis, particularly for 2010 onward.

What's important for me is that the value of my RRSPs will never go down; they will always increase in value. By making the decision to invest exclusively into GIAs/GICs for my RRSPs, I am obviously fine for foregoing what could be a 5% rate of return that could be realized by having mutual funds or other investments in my RRSPs. But can you guarantee any rate of return with the funds or investments you have selected? In my case, I'm fine with taking the high road, and parking all my contributions into safe and secure areas.

What about you? Do you contribute and invest into RRSPs? Do you hold mutual funds or other types of investments? How have your RRSPs performed for you in the past 3 years or more?

If the answer is no, now is probably a good time to find out about how you can possibly save some real cash when traveling in and out of the country.

http://ca.travelzoo.com/: With over 18 million travelers following their publication, Travelzoo's mission is to "give you the best and smartest information." Basically, you don’t book tickets on their site, you simply click through to the travel company itself for that. What's more, they don’t charge you for their information, newsletters, or their advocacy work on your behalf!

Personally, I think the best thing about Travelzoo is getting the weekly e-mail to my account regarding all the deals that are available. Travelzoo calls this "The Travelzoo Top 20" and essentially, it is the culmination of a definitive list of the top 20 best travel deals - period. As the site states, "every week, our team researches, evaluates and recommends hundreds of airfare, hotel, vacation package, cruise and rental car deals. Only the most competitive make the Top 20. Our Test Booking Center confirms the accuracy and availability of every deal before the list goes out."

In terms of providing a real life example, over the past couple of years I have planned weekend trips to some of the major centres in Canada, such as Montreal and Toronto, and held off on booking a hotel because I knew that it was likely that Travelzoo would be sending me an e-mail notifying me of deals in these areas. For the most part, I have been able to get 40% off the nightly rate on some of the leading hotels in the area and for just under $100 a night! As a result, I have been able to stay in areas that would otherwise cost me closer to $200 a night, and reap the benefits of being able to stay in a location closer to some of the best entertainment, restaurants, and services available.

Here is an example of what you would see if you signed up for their free newsletter:

The above-mentioned does not include all of the Top 20 - it simply highlights the first six. At any rate, I would certainly recommend it to anybody to at least sign up for Travelzoo's Top 20 list; their free e-mail subscription is located on their homepage.

On a personal note, I have had the opportunity to save over $400 over the past two years just by monitoring Travelzoo's Top 20 e-mail lists before traveling. Maybe you could save some cash as well!

Cheers,

The Rat

After listing the various ways to 'buy into' gold, I made it clear that my #1 and preferred choice in terms of getting exposure to gold was to simply buy it outright and have the damn stuff sent to me in the mail. That's right - buy physical gold.

Upon digging a bit deeper regarding this option, I then proceeded to highlight Scotiabank's ScotiaMocatta eStore where investors are able to purchase gold and silver bars, among other items. For one reason or another, I could not find out with 100% certainty if customers buying precious metals through ScotiaMocatta would actually get the physical gold sent to them in the mail, or just a certificate stating that their gold is safely 'secured' in a vault somewhere.

As a result, I decided to e-mail ScotiaMocatta directly asking the following pertinent question:

"Good morning,

I have a quick question re: the eStore. If I purchase gold (say 1 oz bar), do I actually get the physical gold sent to me or just a certificate of ownership?"

The response I received was the following:

"Thank you for your query.

"...If you purchase a ScotiaGold bar, you receive the gold bar along with an assay certificate.  An assay certificate is provided on all 1 oz gold bars purchased at Scotiabank.

We trust we have handled your inquiry today to your satisfaction.

Thank you for contacting Scotia Mocatta eStore."

At any rate, that solved my concern on whether or not I would be able to receive the actual physical gold. Now it was time to see whether or not I could save some cash on a potential future purchase.

I decided that if I am going to buy some gold in the short-term, I would likely only be able to afford a 1oz gold bar for the time being, so I proceeded to use this for comparing 'apples to apples'.

As per my last post, ScotiaMocatta's 1 oz. gold bars are presently going for about $1,229.76.

Was there an alternative to ScotiaMocatta's e-store? After a search, I came across an article titled, "How To Buy Physical Gold", and this is where I found Kitco.

http://www.kitco.com/: Buying physical gold is an easy process once you find an online gold bullion dealer. Kitco is one of the "most reputable online gold bullion dealers" and is a Canadian company based in Quebec.

Based on spot prices, Kitco's 1 oz. gold bar is presently going for $1,203.90, which seems to offer a savings difference of $25.86 in comparison to ScotiaMocatta. What's more, ScotiaMocatta's site states that "no transaction may be greater than $6000 (before taxes, shipping and administration fees) for any 24 hour period", and their product line in terms of the different types of gold products available, seems to be very limited. For example, I could not find any gold bars for sale on their e-store.

On the other hand, with Kitco, their terms and conditions seem to be quite different. There doesn't appear to be any order limitations other than the fact that orders exceeding $10,000 can only be paid by bank wire. In addition, the customer pays for their gold by means of certified check, cashiers check, postal money order or direct wiring of funds. For orders under $50,000, credit card information also needs to be provided. Unfortunately however, I could not find a 1000g gold bar (roughly $38,000) shipping to countries other than the U.S., so Kitco does have some drawbacks.

At any rate, if you do decide to buy physical gold, the above-mentioned may be a couple of options you may wish to look into. Do you feel it's important to have exposure to gold in your portfolio? Or do you feel precious metals such as gold and silver are simply over priced to even consider buying at the present time?

The following paragraphs explain how I was able to do it:

Firstly, our home's assessed value currently sits at about $207,000. After checking with a couple of local providers, I narrowed the search down in terms of what the cost per month would be AND how comfortable I was in terms of dealing with the organization. Note the bold 'AND' component of my evaluation.

Based on the aforementioned, I decided to deal with the Co-operators.  One of the main reasons I decided to go with the Co-operators is that they are known (at least in my region) to be punctual and good to deal with if a claim has to be issued. Their website even boasts this fact as it states, "Insurance is a promise to help you get your life back to normal in case of an accident, theft or disaster. Nobody likes to make a claim, but when you have to, you'll find that our in-house claims representatives will work with you, so you can get on with your life as quickly as possible." My brother once had to make a claim due to an accident at his home, and the co-operators were great to deal with. The Co-operators Group Limited is a 100% Canadian-owned company with over 60 years of history as a co-operative.

Secondly, when it came time to sit with them, I informed the agent that I wanted to have broad coverage for my personal property and my goal was to try to minimize our monthly payment to under $50/month if possible. Based on our discussion, this would only be possible if I was comfortable changing my deductible amount from $500 to another number. As a result, I agreed to go ahead with a deductible amount of $3,000.

I realize that this decision could have some financial ramifications if for example I need to make a claim because my roof has just flown of the house for example. Instead of paying only $500, I would now have to pay $3000; however, before going ahead with the decision, I factored in the probability of certain events happening along with our comfort zone in the advent of a catastrophe at our home, and we are fine with the decision.

Our property coverage includes the main building (limit of $186,000), our garage (limit of $27,900), additional living expenses (limit of $37,200), replacement cost guarantee, extended water coverage Level 1, and broad personal property coverage (limit of $139,000). There is also coverage for Liability items such as legal liability, voluntary medical payments, and voluntary payment for damage to property of others.

Lastly, there are ways to knock down the premium you will be paying. One thing that is important to keep in mind is whether or not you have had previously filed any claims. In my case, I have never filed a claim so I was able to receive a 15% coverage discount. In addition, if you happen to have what the co-operators consider to be 'preferred heat' (in our case we have electric panel based heat and no wood stove, furnace or oil tank), you can get a Preferred Heat discount of 15%. Furthermore, if you are mortgage free, you can also avail of another 10% discount on premiums. The total savings discount in premiums for the above mentioned amounted to $294 ($110, $110, and $74 respectively).

If you're interested in possibly lowering your Homeowners Insurance, the co-operators may be an avenue worthy of pursuit. In our case, it is certainly working for us!

Do you have Homeowners Insurance? If so, how much are you paying for it on a monthly basis? Would you be comfortable raising you minimum deductible in order to have lower monthly payments?

Perhaps the most uplifting part of the week for me was the realization of an increase in readers on my site. It's great to see that there are people interested in my daily threads. It's also been a pleasure to see an increase in comments from viewers over the past few weeks, although there has been little activity in this department over the past week.

At any rate, my true objective for this site is to share ideas about personal finance, investments, the economy, deals & promotions, and business in general. My hope is to play a role in not only achieving my Quest For Personal Finance Success vis-à-vis my own plan to retire in the coming few years, but equally important, to provide a forum where others can achieve their respective goals. Whether it's through the content of the threads or commentaries from people visiting the site, my hope is to provide a busy place in cyberspace where people can share ideas that will allow them to make better life decisions as it relates to their personal financial matters - and succeed at doing so.

The revamped website for Ending The Rat Race is coming along rather nicely, thanks to a couple of colleagues that have been working diligently on it, and it looks as though I will be able to officially release it in the near-term. Again, no need to worry in terms of finding it - my domain names for the site will remain the same, so whatever way you normally get to my site, that won't change.

On the flip side, I have had a few setbacks this week. The iMac computer that I had been saving for since this past summer arrived via UPS broken and in pieces. Not only did I have to repackage it and wait for a new one to come, I found out yesterday that the tracking process of the box became 'misplaced' and the darn thing hasn't even shipped from California yet, so it will be early December by the time I even get to use it! For something that was ordered in October, things are just not going right here.

In addition, I approached a couple of bloggers in the PF blogosphere requesting to do a guest post for each others' sites, and I have not yet even received a response. I'm obviously ok with it if someone isn't receptive to doing that sort of thing, but it would have been nice to get a response. I'm beginning to think it may have a lot to do with the fact that I only have 20 to 25 readers established, and the exercise would not have proven to be advantageous for generating traffic to their site.

But should that really matter? This brings me to my key purpose for this site. I can assure you that if my only goal was to generate a new income stream for my own financial benefit, I'm doing a piss poor job because blogging is probably the last place on earth I would venture as a businessperson. The return on investment is nowhere near what I'm used to, and when you take into account hosting fees, website design and construction, and the hours involved in posting threads, it is easy to see why a lot of bloggers aren't doing it for the money. This is the category where I fall under; to me, it's a certainty that I won't be quitting my daytime job as a trade-off for blogging any time soon.

But there are obviously people out there blogging for mainly financial purposes. Take for example, the article, "Paid-off Posters To Pay the Piper?" in the November 9, 2009 edition of Canadian Business magazine. In it, it states that the U.S. Federal Trade Commission is requiring bloggers, Twitterers, and online publishers to "disclose payments or handouts they accept from the makers or suppliers of items they endorse in their posts." Failing to do so could result in fines of up to $16,000.

Personally, if there is a way to eventually earn some money in the coming years by advertising through blogging, I'm fine with that if those opportunities come my way. However, my main goal is to share my experiences on my path to financial freedom, and to provide a forum for others having common interests to interact and share similar ideas. That's the bottom line.

If it ever gets to the point where The Rat is barely even posting on his own site in the run of a week because writers have been hired or featured on a virtually daily basis, then that's when the originality of my site becomes compromised, and I will be forced to ask myself, "is this what the real intent of Ending the Rat Race is supposed to be?" Maybe it could get to that stage one day, but the most important thing would be to ensure that the subject matter is beneficial to the readers, there is value, and the spirit and integrity of the site is maintained.

Have a great weekend,

The Rat

Perhaps the overall sentiment in terms of the way things are going is a product of viewpoints getting clouded by the seemingly never-ending, varying opinions of analysts? After all, before last year's debut of the 'Great Recession', many analysts were offering bearish and bullish reports and opinions.

Unfortunately, things seem to be similar today. After picking up a copy of the November 9, 2009 edition of Canadian Business magazine, I noticed an interesting article written by Thomas Watson, titled, "Different Story Down Under".

The article mentions how Australia's recent move to raise its key lending rate to 3.25%, coupled with the fact that currency speculators predict Canada's loonie to increasingly inch closer and closer to parity with the U.S. dollar has caused many to believe that we are moving our way out of the global economic meltdown. The double-dip recession chatter over the past several weeks has also seemingly become taboo for discussion.

But Watson argues that there is more than meets the eye with respect to what is really going on. In fact, here are some pertinent details to take into consideration and that stem from the article of discussion:

• We will not see a rate hike by Canada this year, as per John Calverly, Standard Chartered Bank's head of North American Research
• Australia and Canada are both "commodities-based economies"
• It can be argued that Australia did not even enter a recession due to its hefty trade activity with China
• Canadian economic activity (as per the IMF) will actually shrink this year, and the GDP is only expected to rise by 2.1% in 2010
• The IMF forecasts a 2.7% decline for the U.S. this year, and only 1.5% economic growth for 2010
• The U.S. is expected to run annual deficits of greater than US $1 trillion until the 2020s

Another interesting point brought to light in the article by Standard Charter is the discussion of what's going on in the world's largest economy - the U.S. The stimulus, it is argued, can only provide 'adequate breathing' if you will, for the short-term.

In my view, it seems as though many are cautioning that too many analysts are overly optimistic with their bullish forecasts. What could be considered troubling for some is that China's high economic growth could spell more difficulties for the U.S. with its fledgling housing crisis, astronomically high deficit spending, and realization that "foreign reserve holders are diversifying away from the U.S. dollar". The article even goes on further to suggest the possibility of how the global financial system could become destabilized, possibly explaining the rationale behind gold prices hitting all-time highs.

Unquestionably, the above-mentioned causes me concern as an investor. I don't like hearing or reading about potential economic cataclysmic events, even if it is possible for them to happen. Unfortunately, I force myself to digest what it is I read, even if it's not what I want to hear.

My experience as an investor in last year's meltdown was a life-changing one. I lost a tremendous amount of portfolio value in relation to my own personal savings that I had invested, and it is something that I will never forgot. I also had leveraged funds and had to act fast as things nose-dived.  As a result of the past year or so, my Asset Allocation and Target Asset Allocation (see a previous post) have been remodeled. In fact, I actually created my own Investment Policy Worksheet and consider it to be my 'bible' regarding my own investment strategy.

In reading the article of discussion however, it did remind me of a reoccurring theme with the state of the economy. No matter where you go, you will hear or read about predictions and forecasts, and what type of perfect storm or sunny day is before us. My goal is to be ready for whatever comes - and that entails a solid asset mix with sufficient safety in my portfolio.

Do you have an idea as to where the global economy is heading, generally speaking? Are we in 'recovery mode', or are we heading into a nightmare on Wall Street/Bay Street for 2010? Are you comfortable with your own portfolio's asset allocation, based on the current state of affairs?

After surfing the web a bit yesterday, I noticed the organization's name again and decided, "what the heck", and visited their website. It turns out that Ally is actually offering some prettty lucrative GIC interest rates in comparison to many banks and institutions across the country.

http://www.ally.ca/en/index.html: Without hesitation, I headed for the rates page. Personally, I was mostly interested in what the going rates were for a 5-year GIC paid monthly in relation to the minimum investment required. To my surprise, as of today, the going rate for a 5-year GIC is 3.60%, regardless of what the minimum investment is to be. Here is the list of their going rates:

Everything looked fine on the surface, but when I went to the "the ally story" section of the website, I noticed that it mentioned that Ally is a actually product of ResMor Trust Company, a Member CDIC. As a result, the big question was: would my investment in Ally be protected up to $100,000? Or would it only be fully protected with ResMor Trust Company, seing they are the actual Member CDIC?

The next logical step was to take a closer look at ResMor Trust Company.

http://www.resmor.com/index.aspx: After navigating through some of the more basic information on the site, I proceeded to the GIC rate section. I immediately noticed that the rates were not as attractive as Ally's rates; in addition, there were also established minimums in order to avail of the more lucrative rates. For example, they offer an interest rate of 3.45% for a 5-year GIC; however, this only applies for investments of $50,000 or greater. The following is a list of some of their going rates:

Ok, so things are very different on the ResMore side of things. Rates and minimums are certainly less attractive. And the big question remained regarding whether an investment in a GIC with ResMore would be fully protected and not with Ally.

I proceeded to call Ally and was able to reach a customer service representative. The person on the phone reassurred me that everything should be fully protected on savings up to $100,000; however, she informed me to send an e-mail or contact CDIC. I did better than that and contacted both CDIC and ResMore Trust Company to ask for clarification regarding protection, and I am waiting for their responses.

Regardless, the above mentioned does highlight the fact that there are some good GIC rates that investors can avail of, we just need to look around a bit. Who knows, perhaps Ally or ResMore Trust Company may be an avenue you may wish to pursue yourself? Personally, my goal with respect to my Target Asset Allocation, is to eventually have 60% of my investments in GICs/GIAs/savings equivalents. Who knows, maybe in the coming weeks I will entertain one of these options and open an account!

Cheers,

The Rat