Yesterday, blogger Michael James on Money left a good comment on my post about taxes and inflation - how people with Canada Savings Bonds are irrationally wistful for the old days of high interest rates. However, even at today's low interest rates, the CSBs are awful - paying only 0.65% this year (see this rate chart for ordinary anytime cashable CSBs and this chart for the once-a-year cashable premium bonds), they don't come close to compensating for the current 2.4% CPI inflation even before taxes. The stealth tax of inflation is quietly, and probably mostly invisibly to most CSB holders, giving the government almost a 2% real return.
What can one do with cash? In his post on this year's CSB issue, Canadian Capitalist and his commenters discussed some higher interest alternatives for liquid and secure cash. Rob Carrick of the Globe and Mail posted a list of investment savings accounts in his October 29th column How to get some bang for your safe bucks, though one should check the current interest rates as they may have changed.
The CSB motto is "the way to save, guaranteed" (see top of page here). More accurate would be "the way to lose, guaranteed".
Wednesday 8 December 2010
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3 comments:
I agree that CSB interest rates are very dismal right now. For the reasons in your last post, CSB rates have almost always been dismal for investors in the top tax bracket. Thanks for the mention.
How true, how true. A pretty lousy investment vehicle.
I got a note saying a series of Bonds my parents bought for my kids a while ago, as of November 1, will not longer pay interest AT ALL. Wow, I guess they want me to cash those in, right?
I still have bonds, only because I am a lazy SOB in terms of this kind of stuff.
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