Monday, March 23, 2009
A month ago yesterday, I received a phone call from BMO: my abysmally low-interest RRSP GIC was up for renewal (the anniversary was easy to remember: Heather's birthday) and they wanted to know if I wanted to do something fun and exciting with it. I'm young(ish) so I opted to invest in some investment product linked to the [stock] market's performance. If you've been following the stock market (or even if you haven't) you probably know that things haven't been going very well for investors lately. But I figured, hey, it's got to bottom out some time, and by five year's time, things will probably have picked up quite a bit - I'm wagering significantly more than the pitiful return I was getting on my existing investment. The thing was, for some reason on which I am not entirely clear, I had to wait until March 11th before my funds could be invested in this new market-linked GIC. As it turned out, March 11th marked the first day of the current run of positive gain days on the stock market. Is this more than an uncanny coincidence? Absolutely not. But it's happy news for me nontheless. Of course, my fortunes are just as likely as not to go the opposite direction, so this could just be the same sort of experience a lottery player must feel when the powerball pops up 6 numbers that they picked followed by 3 numbers that they didn't.
Still, the Canadian dollar is going back up along with the price of oil. I hope that trend continues. I need to maximize the value of my savings in $US for the move. Once I'm down there, the loonie is free to tank. Unless I get NSERC, in which case, I'll be torn. And oil? I like expensive oil as a disincentive to driving and for innovation of more efficient and cleverly designed automobiles.
3 comments:
That is definitely very serious business... I have the same (hopeful) view on the market and went so far as to bet on the financial companies index (in an ETF) - though I could go for a nice drop in the dollar, for about a week, as I have a few yankee dollars I need to change in Canadian.
I also enjoy saying "light sweeeeeet crude" when they report the price on the news.
Never heard of a “market-linked GIC” before ... What is being guaranteed if it is linked to a market??? Or is it guaranteed to follow the market or perhaps guaranteed to be inserted at bottoms... On a side note is there “foreign market-linked GIC’s”?
I think the product works similar to an index fund, except you get a smaller cut: they only give 70% of the performance of the index. However, that smaller cut buys you the assurance that you will always get at least your principle (i.e., even if the market totally tanked by the time it matures, you make 0% on it, rather than lose money). The particular one that I got tracks three different markets (I think it's Dow, Toronto and something else that escapes me now), and gives the return on the best performing one.
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