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  • CDIC Insurance and Secured Funds

    Posted by Laura Mrochuk on April 29, 2023 at 11:53 am

    A new board member raised issue of CDIC insurance coverage for Reserve Funds in light of recent bank failures… does anyone have insight on this? As I understand it, every $100,000 in contributions would need to be deposited with a unique financial institution (per CDIC guidelines). We are investing in High Interest Svgs and short-term GICS since we are a new development (<5 yrs) currently so would only need 3 separate deposits with qualifying institutions but when the RF reaches $1M plus, it would become very cumbersome.

    Given the above, I’d say our risk tolerance is very low so anything other than GICs would likely not be approved either. Although we are a new complex, we have already identified some repairs that will impact reserve funds. Our fund study is about 3 yrs old, development was incomplete at time of study. Construction is now finished, I think a new RFS should be done now to ensure our contributions will meet our current needs, rather than wait until it is due at 5 yr point.

    Interested in hearing thoughts from seasoned condo owners/board members … Thanks!

    Laura Mrochuk replied 3 weeks, 3 days ago 3 Members · 4 Replies
  • 4 Replies
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  • Neil Holatko

    Member
    April 29, 2023 at 12:23 pm

    The first paragraph is correct. You’ll find institutions have different branches within, for GIC’s and other reasons… for instance, Oaken was the highest in Calgary for GIC’s at 2.1 % prior to BoC rate hikes. Within Oaken there are 2 branches allowing for $200k insurable (Oaken Home Trust and Oaken Financial? I can’t recall). Once you’ve hit around 3 or more institutions it could be difficult to maintain but GIC’s are straightforward and creating an excel or google sheet is quite simple… You’d be losing much of your gains hiring a manager who charges basis points (look for one that charges an annual rate). The best returns are at 5 years and if you sort yourselves out correctly you could have 1 or 2 special meetings a year just to plan investments and review. With 1 million and CDIC coverage you’ve got 10 purchases… over 5 years… that’s only 2 maturing a year. If a 5-year ladder isn’t the appetite, then try to plan the maturity cycle timing to be tight and pre plan your options and the meetings with institutions within that week.

    Schedule 2 doesn’t allow for much other than GIC’s but it does allow for some great dividend stocks and bonds. A conversation is best held when you have multiple board members with financial backgrounds.

    Could you have a Reserve Fund Update instead of a new study? That may be a little more affordable and timelier.

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  • dana bouwman

    Member
    April 30, 2023 at 11:25 am

    Hello! If you use a broker such as Manulife or Edward Jones they will help you buy GICs so all your money is insured by CIDC.

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  • dana bouwman

    Member
    April 30, 2023 at 11:28 am

    Here are the two advisors I run into a lot:

    Ryan.Ardron@manulifesecurities.ca

    jordan.fraser@edwardjones.com

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  • Laura Mrochuk

    Member
    May 10, 2023 at 1:31 pm

    Thanks for the advice and insight! It sounds like it may be manageable in the longer term. Finding lowest advisor fees would help.

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