Grace Gamboa - Mobile Financial Advisor

Advice from Grace: Understanding Variable Rates, ways to save for your future.

Grace Gamboa - Mobile Financial Advisor

Variable rate term deposits are like any variable rate, they fluctuate relative to prime. Right now the prime rate at the credit union is 3.95%. In terms of investing, that’s good. I’d say it’s advantageous for people to think variable right now, because the forecast is that rates are expected to go up, so you’re positioned to benefit from higher interest.

But how do you know if it’s right for you, specifically? That depends on the term, and your cash position. The 18 month variable term deposit, for example, is a great fit for a comfortable investor looking for something short term, not wanting to lock their funds in for too long. During the 18 months, the deposit is non-redeemable, so you can’t pull it out should you change your mind, or need the cash for something else. And although the term can’t extend beyond that time, it can be renegotiated at the end of the term. Another good thing to know is that many term deposits are also Tax Free Savings Account (TFSA) eligible. With a TFSA, you aren’t taxed on the money you earn inside your TFSA, such as interest, dividends and capital gains. That’s another great way for our members to save, because your TFSA eligibility is cumulative, meaning if you don’t use it, you don’t lose it. It adds onto your eligibility the next year. For 2019, the annual limit is $6,000 and the cumulative limit is $63,500.

Is now a good time to invest? Right now the credit union’s term deposit rates are outstanding, very competitive. Markets are down so it’s a good time to diversify and put money aside, particularly in one that is based on a variable rate. The flexibility of riding rising rates can be to your benefit, supporting you in your short-term financial health goals. As rates rise, so does your investment.

What I most like to share with our members is that there’s no bad time to think about investing, as there are so many different strategies, and some that are designed to protect you from risk completely. The real key to building your financial health is to save, and the best time to do that is always now. Whether the markets are good or bad, when you average it out, you benefit. Even small contributions help you out when you’re planning for your future. In fact, most people are surprised at how much those small contribution add up over time. Pleasantly surprised! Please call me if you have any questions, and start investing in you today.

Get in touch with Grace:
Call or Text: 604 989.5652


Find Branch/ATM

Enter address, postal code or branch name