Tausi Insider

The seventh and final Bank of Canada interest rate hike of 2022 overshadows some encouraging news for people with a mortgage coming up for renewal. Fixed-rate mortgage costs take their cue from what’s happening in the bond market, where the prevailing view is that we’ve seen the worst with inflation. Rates in the bond market have fallen sharply in recent weeks, which means we could see lower fixed mortgage rates before too long. The latest increase in the Bank of Canada’s overnight rate means higher costs for variable-rate mortgages, but there’s a positive spin here, too. If we haven’t reached the peak for the overnight rate, we are darn close. Whether you’re a borrower, a saver or a conservative investor interested in guaranteed investment certificates, we are very close to an inflection point on rates that requires fresh thinking. Savers and GIC investors, we’ve likely reached the “as good as it gets” point. Borrowers, your job is to endure until rates decline. For now, there is th...

Bank of Canada Governor Tiff Macklem gestures at a press conference at the Bank of Canada in Ottawa, on Wednesday, Oct. 26, 2022. The Bank of Canada hiked its key policy rate half a percentage point to 4.25 – the highest it's been since January 2008 – on Wednesday as its bid to rein in stubbornly-high inflation rates and address slowing economic growth continues. THE CANADIAN PRESS/Sean Kilpatrick Sean Kilpatrick/CP Getting caught up on a week that got away? Here’s your weekly digest of The Globe’s most essential business and investing stories, with insights and analysis from the pros, stock tips, portfolio strategies and more. Interest rates went up, again. But here’s the good news The Bank of Canada raised interest rates for the seventh consecutive time this week, increasing the benchmark lending rate by half a percentage point to 4.25 per cent, the highest level since early 2008. While the rapid rate-hike cycle has been painful for borrowers – especially for Canadians with a v...

Amid a triple-whammy of rising interest rates, inflation and uncertainty, Canadians have socked away billions in the safe confines of guaranteed investment certificates this year, a sizable stockpile that could eventually be released back into the economy and markets. Since March, when the Bank of Canada began raising its target overnight rate to counter mounting inflation, Canadians have pumped roughly $125-billion into fixed-term deposits like GICs at chartered banks. One-year GICs are currently paying upwards of 5 per cent, though that’s still shy of Canada’s 6.9-per-cent inflation rate. And of the increase, most has been in non-tax sheltered accounts, meaning taxes will take a big bite. Unlike dividends, the interest income from GICs is fully taxed at an investor’s marginal tax rate. Even so, Canadians have been drawn to the safety of GICs. Some of the GIC money is a holdover from the pandemic savings boom. Government stimulus and reduced spending meant chequing deposits at the b...

A retired money manager confessed something to me this week. “I never thought it would come to this,” he said, with the embarrassed look of a fitness instructor caught digging into a tub of rocky road ice cream. “I finally did it, though. I broke down and bought a GIC.” For my friend, a guaranteed investment certificate is a symbol of professional surrender. He has spent several successful decades picking stocks both for his former employer and for his own portfolio. He is a staunch believer in the long-term benefits of stock ownership. But a few months ago, he decided he was simply not seeing many areas of the Canadian or U.S. stock markets where the potential reward over the next year outweighed the risk. So he edged away from his lifelong love affair with equities and put a portion of his portfolio into one of the safest, most boring investments imaginable. Many other people are also discovering the allure of GICs. Since the start of the year, Canadians have pumped roughly $120-bi...

Amid a triple-whammy of rising interest rates, inflation and uncertainty, Canadians have socked away billions in the safe confines of guaranteed investment certificates this year, a sizable stockpile that could eventually be released back into the economy and markets. Since March, when the Bank of Canada began raising its target overnight rate to counter mounting inflation, Canadians have pumped roughly $125-billion into fixed-term deposits like GICs at chartered banks. One-year GICs are currently paying upwards of 5 per cent, though that’s still shy of Canada’s 6.9-per-cent inflation rate. And of the increase, most has been in non-tax sheltered accounts, meaning taxes will take a big bite. Unlike dividends, the interest income from GICs is fully taxed at an investor’s marginal tax rate. Even so, Canadians have been drawn to the safety of GICs. Some of the GIC money is a holdover from the pandemic savings boom. Government stimulus and reduced spending meant chequing deposits at the b...

A retired money manager confessed something to me this week. “I never thought it would come to this,” he said, with the embarrassed look of a fitness instructor caught digging into a tub of rocky road ice cream. “I finally did it, though. I broke down and bought a GIC.” For my friend, a guaranteed investment certificate is a symbol of professional surrender. He has spent several successful decades picking stocks both for his former employer and for his own portfolio. He is a staunch believer in the long-term benefits of stock ownership. But a few months ago, he decided he was simply not seeing many areas of the Canadian or U.S. stock markets where the potential reward over the next year outweighed the risk. So he edged away from his lifelong love affair with equities and put a portion of his portfolio into one of the safest, most boring investments imaginable. Many other people are also discovering the allure of GICs. Since the start of the year, Canadians have pumped roughly $120-bi...