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GICS: OAKEN FINANCIAL, TFSA TRANSFERS
8/20/2017 8:48:48 PM
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Wealth Builder
Gordon Pape writes on common-sense wealth-building strategies.



By Gordon Pape  | Monday, August 07, 2017


* Should he buy GIC from Oaken Financial?
* Can you transfer a GIC to a TFSA?


Should he buy Oaken GIC?

Q – I tried to convince my wife to switch from CIBC to Oaken Financial because CIBC is giving me 1.30% on a GIC for one-year non-redeemable and are insured by CDIC. Oaken Financial gives me 2.6% for one year. The inflation rate is 1.60%. Since you are an expert, what is your opinion? – George V.

A – Of course, 2.6% is better than 1.6%. You don’t need an expert to tell you that. And both CIBC and Oaken Financial are covered by deposit insurance up to $100,000 per depositor.

But you may not be aware that Oaken is part of the Home Capital Group. If you’ve been paying any attention to the business news recently, you’ll be aware that Home Capital is in deep financial trouble and recently experienced a classic “run on the bank” as investors withdrew millions of dollars when it appeared that Home Capital might get into trouble with regulators. However, with a change in management and the injection of substantial capital from Warren Buffett’s Berkshire Hathaway Inc., it appears the crisis has now passed, but many people are still reluctant to put money into Home or any of its subsidiaries, despite CDIC coverage. It appears your wife is in that group. – Gordon Pape

Transferring GIC to TFSA

Q – I have a GIC I purchased five years ago that is coming near its date of maturity. I didn’t purchase this GIC in a TFSA account, but is it somehow possible to add it to a registered account before maturity? – Gurbaz S.

A – If you have a self-directed TFSA, you could move the GIC into it if you have contribution room, but it won’t do you much good. The tax people will view that as a deemed disposition, and all interest earned up to the date of the transfer will be taxable. You would be better off taking the money at maturity, contribute it to a TFSA, and then buy a new GIC within the plan, if that is how you want to invest. Frankly, with interest rates so low, I would look at some more aggressive options for reinvesting. – Gordon Pape

If you have a money related question send it to me at gpape@rogers.com . Write “Fund Library Question” in the subject line. I can’t guarantee a personal response, but I’ll include the most interesting ones in this column.

Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investornewsletter, which are available through the Building Wealth website.

For more information on subscriptions to Gordon Pape’s newsletters, check the Building Wealth website.

Follow Gordon Pape on Twitter at https://twitter.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.

Notes and Disclaimer

© 2017 by The Fund Library. All rights reserved.

The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.

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