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Dale Jackson

Personal Finance Columnist, Payback Time


The Bank of Canada is holding the benchmark rate at 1.25 per cent and that means yields on fixed income such as bonds will remain miserably low. That’s good news for borrowers but bad news for lenders, which includes many retirees who rely on a safe income flow from their savings or investors looking for a cushion from volatility in equity markets. For the past decade they’ve had to go to a riskier well for income from dividend paying stocks. Those same stocks have come under pressure lately with the prospect of higher bond rates looming.

But we’ve been hearing the higher interest rate story for a long time. The yield on the benchmark U.S. 10-year bond topped three per cent earlier in the spring but lost its footing. All savers can do for now is be patient, look for the best short-term rates, and be ready to pounce when interest rates actually do rise.

Most advisors recommend a laddering strategy, where maturities are staggered over three- to five-year periods to give investors frequent opportunities to lock in the best rates. Right now the best short-term rates are arguably in guaranteed investment certificates (GICs). Like the name implies GICs are guaranteed because they are ultimately insured by the federal government. is a website that tracks the best GIC rates. According to the site, Oaken Financial offers one-year GICs at 2.8 per cent and two-year GICs at 3.1 per cent. EQ Bank offers five-year GICs at 3.5 per cent – but you have to wonder if 3.5 per cent might look like a pittance in a couple years when interest rates eventually take off.