Bonds, GICs, and Guaranteed Investments

Your ScotiaMcLeod account can hold a wide variety of Guaranteed investments.  The table below describes some of their attributes, or contact us for specific recommendations or to add these investments to your account.

As a rough rule of thumb, you should hold your age as a % of your overall asset allocation in guaranteed investments, but that will vary with your own risk tolerance.

	Bonds	Strip Bonds	GICs	Bond ETFs	Bond Funds
Guaranteed Maturity Amount and Date	Yes	Yes	Yes	No, Bond ETF values and returns fluctuate and are not guaranteed	No, Bond fund values and returns fluctuate and are not guaranteed
Ability To Sell	Yes, at market value	Yes, at market value (see example .pdf 6k)	No	Yes, at daily Net Asset Value	Yes, at daily Net Asset Value
Guaranteed By	Issuer, generally Canada or the Major Provinces, unlimited guarantee (corporate bonds not generally recommended due to lack of diversification)	Issuer, generally Canada or the Major Provinces, unlimited guarantee (corporate bonds not generally recommended due to lack of diversification)	CDIC To $100,000 Per Issuer (can be up to $600,000 in Self-directed RSP)	Not guaranteed	Not guaranteed Corporate (High Yield) Bond funds at least have benefit of diversification
Minimum Investment	Generally  $10,000	$5,000 of Maturity Value, can be as little as $2,000 of initial investment value	$500	Roughly $5,000 to be cost effective	$50 in payroll plans
RSP Eligible	Yes	Yes, Highly recommended - ladder maturities for best results	Yes	Yes	Yes
Tax Comments (Non RSP)	Interest paid semi-annually, and taxable each year, try to buy at a discount, to enhance after tax yield (need to reinvest if not using interest paid out)	Interest paid all at maturity, but taxable each year.  Not recommended for taxable accounts due to unfunded tax liability	Annual interest GICs recommended in taxable accounts	Complicated	Interest calculated by fund manager and taxable each year
Transferable?	Yes to another self-directed RSP or investment account	Yes to another self-directed RSP or investment account	No, only upon maturity	Yes to another self-directed RSP or investment account	Yes to another self-directed RSP or investment account
Fees (Commission)	Built into yield (very cost effective)	Built into yield (very cost effective)	Built into yield (very cost effective)	Same commission as buying a stock (expensive)	MERs generally 1% to 2% a year (expensive)*

*While we generally don't like the management fees on bond funds, there are some reasons to consider funds over direct bond ownership under certain circumstances, and AIC has consolidated those reasons into one document (see "Bonds vs. bond funds").

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