Hey Bob Shark questions for You?

Question

rate increases each year of the term

earn a premium return over both the CIBC Cashable Escalating Rate GIC® and our regular Long Term GIC

two interest payment options are available:

simple interest: paid annually

compound interest: compounded annually and paid at maturity

Could you explain more about the interest it sounds as if the simple interest is monthely and the compound put all of it together throughout the year in one interest payment

Answer 1

you need to understand how long you want your money tied up.

As I don't use Gics anymore, I don't know the rates.

But if you buy a multi year Gic, you will get a higher rate, but if interest rates go up, you will be stuck with the rates you contracted for., But if interest rates go down, you will benefit from the locked in rates.

But lets face it, long term rates are going up, once we get over this credit crisis and recession.

The options given  show they are trying to get you for the long term.

So that being said.....

It is an escalating rate GIC, low rate in the beginning to best rate in last term meant to keep you in

Pays slightly more that Cashable Escalating, because it is locked in and more than Long term Gic, (Slightly) because of  the way interest is paid out, (But not by much)

Simple interest paid annually, gives you the interest in your bank acct or cheque once a year

Compound interest stays with the Gic and the interest earned this year is added to the principal to have interest calculated on it in subsequent years. and all interest and principal paid to you at maturity.

Interest is either calculated and paid YEARLY or It is calculated yearly and added to the principal to grow with the principal over time

you do not get paid monthly

For that, Buy a  monthly income mutual fund.