Comments on: How Canada Savings Bonds and Canada Premium Bonds Work

By: Vaughan boy

Vaughan boy — Sun, 05 Feb 2012 17:16:02 +0000

Hi guys, sorry if I am replying to a really old topic.

I just have one question: I have been buying these CSB bonds ( in the form of rsp) through my company’s automatic deduction program.

The interest rate is very low, about 0.5

But I just read about the existence of the Premium Bonds which have double the interest rate of their CSB cousin.

The question I have is, which I couldn’t find on the CSB website is, how do I transfer my money from the regular to the premium bonds?

I know the interest rate is still not comparable to those with ING and Ally, but for me this is just a secondary saving option beside my main one. Plus, the main reason I use this is that it is automatically deducted and there is never a risk of me taking the money and spending it. Not to mention, since it is not sitting in my bank, it is not easy to just go and withdraw it. And last, like I mentioned, my CSB is in an RRSP account, so even if I decide to withdraw them now, I will be penalized.

Thank you

By: used tires

used tires — Mon, 07 Sep 2009 04:27:11 +0000

Would be great if you could explain what the numbers mean, and how to read that chart, I am still learning this stuff so it was a bit overwhelming for me looking at those interest rate charts, hehe. Not sure how to interprate them is what I mean.

Till then,

Jean

By: Matt

Matt — Wed, 26 Aug 2009 00:58:26 +0000

Claymore offers 1-5 year laddered bond etf’s with only .15% MER in both corporate and government bonds. I am a fan because a) they are highly liquid and b) they currently are offering 4.6% yield for CBO and 4.1% for CLF. Obviously these would be held in a registered account and not ideal for day traders.

By: phi

phi — Wed, 26 Aug 2009 00:32:23 +0000

Regardless of if it’s in Canada or the US, bonds are more of a defensive play. I remember when people were purchasing US treasury bonds with 0 returns just to play it safe.

By: Mechanonuke

Mechanonuke — Tue, 25 Aug 2009 16:42:58 +0000

CSBs may be more enticing to wealthier individuals seeking safety, above and beyond the safety offered by high interest savings accounts which have deposit insurance only to a certain dollar value.

For the average middle class person ING may be better but for high net worth persons (i.e. Multi milionaires.) CSBs could be ‘better’ from a safety point of view.

By: Traciatim

Traciatim — Tue, 25 Aug 2009 15:29:11 +0000

Not in my company they don’t, but my company does offer a match to an RRSP/DPSP program which is pretty generous. I participated ion this program in order to save for a down payment on a house, and now am actually using it to start a retirement account.

Anyway, the last I checked I think the CSB program was around 1.25% or something. At the time I looked (which may have been last year) it was under inflation if I’m remembering correctly. That’s kind of pointless to participate in.

By: MikeG

MikeG — Tue, 25 Aug 2009 15:22:24 +0000

I know some people like to by CSBs as gifts for children. I guess to help them learn about saving and investing? I personally will always choose the dividend stocks over CSBs cause of the tax preference and growth potential. And if I’m saving for something in the short-run then a high-interest savings account is good enough.

By: investnoob

investnoob — Tue, 25 Aug 2009 13:15:36 +0000

Traciatim, do some employers match contributions or something of that nature? I can see that being an enticement. But, I agree, I can’t see why people make this purchases, unless its an emotional decision whereby they think if its “out of sight, its out of mind.”

By: Traciatim

Traciatim — Tue, 25 Aug 2009 12:03:19 +0000

My company has a CSB purchase plan and I’ve never been able to understand what would entice anyone to participate. Every year I look at the CSB vs Ing Direct and always ING savings accounts did better (GIC’s are even better than the savings account). I haev a funny feeling that people are being suckered into buying CSBs by the payroll deduction program out of ease.

What are teh advantages to the employer to have employees purchase CSBs? The only thing I can think of is that the employer is seeing a benefit from enrollment.

By: Jewel of Toronto

Jewel of Toronto — Tue, 25 Aug 2009 11:56:54 +0000

Thanks for the post Frugal Trader! Much appreciated.

By: Ray

Ray — Tue, 25 Aug 2009 11:45:43 +0000

As with GIC, CSB’s are often used by those who like safety and security. It is also much easier to purchase CSB over corporate bonds. You can find strong AAA corporate bonds with much better terms than CSB. CSB can be great short term saving vehicles, but not the best option for long term planning, such as retirement.