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Is now the time for retirees to sell stocks and buy GICs?
– moneysense.ca
Are GICs a good idea for retirement?
As you noted, Rodeen, guaranteed investment certificate (GIC) rates have risen to levels we have not seen in over 10 years. There are one- to five-year rates that are between 4% and 5%. You may not get these rates at major banks, though, where rates are about 2% lower than that, but credit unions and trust companies generally offer a healthy premium.
Are GIC rates going up in Canada?
A year ago, GIC rates were less than 2%. The reason they are so much higher now is worth considering. The May year-over-year inflation rate was nearly 8% so the Bank of Canada (BoC) has raised interest rates to slow down spending and price increases. So, while a 4% GIC rate may seem enticing, it represents nearly a 4% negative real rate of return when adjusted for 8% inflation…
Otherwise, I am resigned to just leaving my money there. They’re taking less now anyhow, since I’ve lost like $9,000 already. I would be grateful for any advice or any resources you could recommend to make an informed decision. I’ve been enjoying your newsletters for a long time.
—Miki
How to remain a long-term investor in a bear market
Miki, after reading your question I am a little concerned for you.
The way you’re describing things it sounds like you’re getting poor or quick advice with very little explanation…