By: Larry MacDonald
Ontario Savings Bonds are on sale from June 1 to June 19. That means you only have until the end of the week to make a purchase (if you live outside of Ontario, you are not allowed to buy the bonds). The interest rates for the bonds are:
• two-year Fixed-Rate Bond: 1.25%
• three-year Fixed-Rate Bond: 2.00%
• five-year Fixed-Rate Bond: 3.00%
• seven-year Variable-Rate Bond: 1.00% for the first year
• five-year Step-Up Bond: 0.75% in first year, 1.50% in the second year, 2.50% in the third year, 3.50% in the fourth year, 4.50% in the final year
The two-year and five-year Fixed-Rate Bonds are new offerings this year. Plus, starting this June, Variable-Rate bonds will be redeemable annually and have their interest rates reset once a year (earlier series had their interest rates reset every six months).
Rates are generally better on GICs. According to the Fiscal Agents website, you can get the following annual interest rates on GICs:
• Two-year GIC: 2.5%
• Three-year GIC: 2.9%
• Five-year GIC: 4.0%
• Escalator GIC: 1.25% in first year, 1.75% in second year, 3.0% in third year, 4.0% in fourth year, 7.0% in fifth year.
GICs longer than 5 years are not covered by Canada Deposit Insurance Corp. The seven-year Variable-Rate Bond, backed by the Ontario Government, would be one way to earn a government-insured, GIC-like return beyond five years. And its rate will rise if market rates rise.
Yet, high-interest bank accounts may offer a better deal. They are guaranteed by the federal government on an indefinite basis, offer higher interest rates that will similarly go up if market rates rise, and are easy to withdraw cash from. ING Direct’s investment savings account, for example, pays 1.35% currently.
3 Responses to “ Ontario savings bonds on sale ”
Do you have any idea why non-Ontario residents aren’t allowed to buy these bonds? The rates are poor and so you’d think that the government would be happy to sell them to just anyone. Perhaps other provinces would be upset if these bonds were marketed to their citizens?
By Michael James on Jun 15, 2009
MJ
I think the other provincial governments would be upset if they were sold in their provinces (because they have their own savings bonds to sell). It’s odd that the rates are kept so low when the Ontario government obviously needs to raise money.
By Larry MacDonald on Jun 15, 2009