Canadian Savings Bond - Worth Buying Or Not?

Canada possessed economic savvy for escaping the clutches of the global recession that gripped and continues to grip its neighbor to the south. With a healthy economy to back it up, a Canadian savings bond is one of the most desirable investment instruments around although we must emphasize that these are only available to Canada residents.

Reasons for Investment In A Canadian Savings Bond

Of course, there are other reasons to invest in a Canadian Savings bond. You will find that securities offered by the Government of Canada have a guaranteed interest rate. Your profit will increase along market lines but your interest income will not fall below the stated period on the savings bond for each investment period.

Plus, you can afford these savings bonds since their denominations start at $100, if you are eligible for the purchase of these investment instruments. You have to wait for the sale of these savings bonds from October until April the following year. Take note that these are debentures instead of being true marketable bonds.

Available Types Of Canadian Savings Bonds

Aside from the Canadian savings bond, there are two other bonds from Canada, namely, premium and investment bonds. Let's discuss each one in turn.

First, the savings bonds are available in both regular and compounding interests with the regular interest bond having $300 as the lowest denomination. Other denominations are $100, $500, $1000, $5000 and $10000, all of which are cashable at any time. The maturity period is actually 10 years with the interest rate for the first year guaranteed to be constant with the interest rate on the last 9 remaining years fluctuating according to market conditions.

Second, the premium bonds are also purchasable in regular and compounding interest as well as in similar denominations as the Canadian savings bond. However, unlike the savings bonds, the premium Canadian bonds can only be cashed on the anniversary of their issue date and then every 30 days thereafter. The interest rates are for up to 3 years with guaranteed returns while the remaining 7 years offer higher interest rates until the bonds' maturity period.

Third, the investment bonds can only be purchased from authorized investment brokers. These are non-redeemable until maturity, which is 3 years from date of issue. Unfortunately, these are unavailable at present.

Again, if you choose Canadian savings bond and other bonds issued by the Government of Canada, you have an iron-clad assurance of being paid on time and for the full amount due.

These savings bonds can be bought at financial institutions and via the official website. You can also wait for the certificates mailed to your doorstep. Keep in mind that there are also plans that are not given the snail mail treatment complete with the certificate inside the sealed envelope. These plans include the Canada registered retirement income fund for holding the savings and premium bonds and the payroll savings plan, among others. ‘

In the end, nonetheless, the desirability of Canadian savings bond will rest on how well you choose and manage these securities. You must learn how to do before you can enjoy the profits.