Monthly pay GIC from Ally

[markopolo]

In Canada, Ally offers monthly interest payment on GIC deposits. That's very handy if you're trying to generate a safe income from your savings. Their 5yr rate is currently 4% (June 8, 2010). To be really safe, make sure to keep your accounts within the limits covered by Canada Deposit Insurance Corporation (CDIC).

I was told that you have to phone them to set up the account to get the interest paid monthly as the option doesn't show up in their online banking website. The monthly interest can be deposited to your Ally savings account or an external linked account with another bank.

Ally www.ally.ca
CDIC www.cdic.ca/e/index.html

[Mike]

It looks like Ally Canada is a subsidiary of ResMor Trust Company, which was operating in
Canada as a subsidiary of GMAC Residential Funding Ltd. in 2007. ResMor was formerly
Equisure Trust. ING Canada bought some portion of Equisure some time ago.
These companies were/are based in Calgary. Their primary products include different types
of consumer and business mortgages, and some critical illness insurance products.
http://investing.businessweek.com/resea ... d=22142850
I believe the CDIC deposit insurance limit is $100,000 per person per institution. AFAIK.
Good advice when buying investment products, always.

[markopolo]

It's kinda sad that I get excited about a 4% return. It took a while for my expectations to get so low. HSBC also has (or had) a monthly pay GIC. Safe monthly income from your money is useful - makes it appear to be working for you.

We are in confusing economic times.

A June 8, 2010, report from The Bank of Montreal stated the following:

Go to Cash – In Plain English

Summary We advocate switching out of equity positions and going to cash. The European sovereign debt crisis appears to be nowhere near over. The global credit environment is worsening. Cost of capital is going up and availability is going down. There are large gaps between where the credit market prices risk and where the equity market is priced. Equity is lagging the deterioration in credit conditions. Moves in currency, equity and commodity markets are mirroring the moves in the credit market. Global growth, in a credit-constrained environment, will slow. Profits will be squeezed by the higher cost of capital.

Pretty blunt advice. Go to cash.

An assistant chief economist at Royal Bank of Canada has a different view and was quoted as seeing the country

moving out of recovery and into the expansion phase

. The Financial Post reported today that

RBC predicts fastest economic growth in a decade

.

4% might not be bad at all.

[Mike]

IMO, energy (and specifically oil income trusts and corps) makes the world turn.
The average ROI is 7%.
There is, and always will be, demand. Somewhere.
Also, IMO, you can't go wrong investing in oil, and to some extent NG, but until the N/A car
market decides to use more of it (say, in a massive push to power vehicles with LNG) it won't
return much. I dread what will happen to our electricity rates (as the current trend seems to
be to replace coal fired plants with LNG powered ones) when the US finally decides to adopt
the Pickens Plan, and the price of LNG quadruples overnight. Move farther south, I'd say.
This is all just my casual musing, though, and not intended in any way, as specific financial
advice.
Some true REITS are looking good too, for after next year. They aren't subject to the income
tax changes that most of the others will be. There are a few that are currently returning around
5-7%/annum.

btw, 4% guaranteed isn't bad if inflation is 0%.

[Mike]

Just saw this this am on BNN
http://www.baltimoresun.com/business/au ... 4380.story

Not sure what effect, if any, it will have on Ally Bank Canada.
Probably nothing, but you never know how these companies will regroup after problems.

[markopolo]

Interesting looking at older posts like this.
As of today:
The TSX index is basically back to where it was when this topic was started two years ago - negative .07%
The Dow Jones Industrial Average is up 28%
Ally's 5 year GIC is now only paying 2.6% and the best 5yr GIC rate I see today is only 2.75%

[Mike]

Throw in problems in Europe, and some say slowing growth in China, and you've got limited options
for where to park your money. Bonds are not as appealing as they were 5 years ago. Nor as safe,
depending on their source.
Energy stocks have pulled back over the last month, as the Euro has sunk (Greece, Spain), and
France elects a socialist, and allowed the US$ to look stronger (usually lowers relative oil price).
That could change depending on whether the Fed goes with a third wave of quantitative easing.
Or if China decides to take some sort of decisive action to increase their growth rate and potential.
The REITs have mostly done well over the same period, as a hedge and might be somewhat
overbought, but they still pay a nice monthly stipend.
As do some of the bigger utilities and telecoms.
You could always take a chance on the Facebook IPO. It's been calculated to hit the market at around
19X potential earnings, so Zuckerbeg wins. Not sure about the rest of humanity. Google and Apple
trade at about 3.5X earnings, to put it in some perspective.
Happy investing.