WEALTH Matters — SUMMER 2011

INTEREST RATE TRENDS

The second quarter of 2011 saw the end of the past year’s trend of rising interest rates. The best 5-year GIC rate dropped back to its 2010 low of 3%, and has since gone even lower after the end of June.

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The Bank of Canada had raised its benchmark rate during 2010 but has left rates unchanged for some time now  as American and European central banks have left their rates at historic lows to stimulate their economies, still recovering more slowly than had been hoped after the 2008-2009 recession. The bond markets have taken on huge cash flows seeking ‘safety’ in the face of equity market volatility, bidding up bond prices and depressing yields. However, 5-year terms are still paying double what 1-year terms pay, and our clients who maintain a ‘ladder’ of longer-term GICs continue to earn much higher yields than those sticking to short terms.

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Interest Rate Trends

Investment Market Commentary

 

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We don’t see much pressure for rates to rise, and expect that the yield curve will remain similar to the current one for the next 6-12 months. One way we have found to help compensate for the low rates is by offering high interest savings accounts that pay many times what the major banks do. Right now, you can earn 1.75% daily interest on your savings!

A Manulife Advantage Account is a virtual bank account that is linked to your regular chequing account. You can transfer your excess cash balances to your Advantage Account, earn 1.75% daily interest, and then transfer whatever you need back to your chequing account whenever you need it, with no service charge.

Manulife Advantage Account

1.75% Daily Interest

 

Bank Savings Account

Average 0.25% Interest

Transfer Instructions by Phone or Internet

For many years we had been using ING Investment Savings Accounts for this purpose, but we have found that Manulife consistently pays higher interest rates, and offers additional benefits. We can set up an account for you in a matter of minutes with a simple application form. Please call us if you would like to find out more.

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