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GIC payouts get supercharged as BoC hikes rates again – BNN Bloomberg

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As borrowers bemoan yet another massive interest-rate hike by the Bank of Canada, savers are getting a long overdue reward.

In the wake of the fourth consecutive outsized increase by the central bank to combat inflation, yields on fixed income vehicles continue to rise.

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Just hours after Wednesday’s announcement, payouts on Canadian government two-year bonds ticked up slightly to 3.62 per cent and some one-year guaranteed investment certificate (GIC) yields have reached 4.5 per cent.

Earlier this year, investors were lucky to get one per cent on a GIC — but the times, they are changing. 

Wednesday’s 75-basis-point (which is a different way of saying three-quarters of a percentage point) increase brings the Bank of Canada’s benchmark lending rate to 3.25 per cent following a surprise full-point hike in July and half-percentage-point increase in April and June. Before then, it sat at an emergency pandemic low of 0.25 per cent.

And the central bank isn’t done; it has clearly signalled more hikes are coming. Markets are pricing in a solid chance of another half-percentage-point increase in October, which is expected to be further reflected in fixed income rates.

Some income-hungry investors have already jumped on the GIC bandwagon. The latest data from the Investment Funds Institute of Canada (IFIC) showed investors pulled $4.5 billion net from mutual funds in July following a net redemption of $10.4 billion in June.

On a conference call with analysts last month, Royal Bank of Canada Chief Financial Officer Nadine Ahn said much of the money pulled from RBC mutual funds in its fiscal third quarter went into GIC products.

Don’t jump on the highest yield just yet

Yields on longer-term fixed-income vehicles are normally higher than shorter-term maturities but experts caution savers not to jump at the highest rate in a rapidly rising interest rate environment.

The official inflation rate has come down since the rate hikes started but is still well above seven per cent. That means even a GIC that pays 4.5 per cent is way below the cost of living. 

For now, most fixed-income managers recommend laddering fixed income in short-term increments so they mature frequently enough to take advantage of yields as they rise. 

After all, 4.5 per cent might look like chicken feed a year from now.

Not all income is fixed

Like the name implies, payouts from GICs are guaranteed and essentially backed by the government. So are payouts from government bonds. If they default, we’re all in big trouble.

Fixed income is reliable income that we can count on when we need it.

Dividends from stocks and real estate investment trusts are considered income, but not fixed, because the payouts are at the discretion of the company or trust, and the value of the underlying investment can rise and fall with the whims of the market. 

Many investment advisors who are only qualified to sell mutual funds (and are only compensated by selling mutual funds) attempt to substitute the fixed income portion of a portfolio with bond funds. Bond funds are not fixed income because their holdings are often traded on the broader bond market and not held to maturity.

Many bond funds have posted losses as interest rates declined.

Fixed income as part of a portfolio

It’s important to have a fixed income component in any retirement portfolio no matter where yields are. Having a significant portion of your savings in fixed income acts as a cushion against volatility on the equity side of a portfolio.

Any positive return is better than the losses on equity markets so far this year, as an example. 

Three decades ago, before interest rates hit rock-bottom, the general rule of investing called for a fixed-income portfolio weighting roughly equal to the age of the investor. That means a 50-year-old would have half of their portfolio in fixed income. If your retirement goal called for an annual real return of six per cent, a five per cent return on the fixed-income portion of your portfolio made it much more attainable.

GICs will pay more going forward, but they have always been a tonic to help investors sleep at night.

Payback Time is a weekly column by personal finance columnist Dale Jackson about how to prepare your finances for retirement. Have a question you want answered? Email dalejackson.paybacktime@gmail.com.  

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Stop Asking Your Interviewer Cliché Questions

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Most job search advice is cookie-cutter. The advice you’re following is almost certainly the same advice other job seekers follow, making you just another candidate following the same script.

In today’s hyper-competitive job market, standing out is critical, a challenge most job seekers struggle with. Instead of relying on generic questions recommended by self-proclaimed career coaches, which often lead to a forgettable interview, ask unique, thought-provoking questions that’ll spark engaging conversations and leave a lasting impression.

English philosopher Francis Bacon once said, “A prudent question is one half of wisdom.”

The questions you ask convey the following:

  • Your level of interest in the company and the role.
  • Contributing to your employer’s success is essential.
  • You desire a cultural fit.

Here are the top four questions experts recommend candidates ask; hence, they’ve become cliché questions you should avoid asking:

  • “What are the key responsibilities of this position?”

Most likely, the job description answers this question. Therefore, asking this question indicates you didn’t read the job description. If you require clarification, ask, “How many outbound calls will I be required to make daily?” “What will be my monthly revenue target?”

  • “What does a typical day look like?”

Although it’s important to understand day-to-day expectations, this question tends to elicit vague responses and rarely leads to a deeper conversation. Don’t focus on what your day will look like; instead, focus on being clear on the results you need to deliver. Nobody I know has ever been fired for not following a “typical day.” However, I know several people who were fired for failing to meet expectations. Before accepting a job offer, ensure you’re capable of meeting the employer’s expectations.

  • “How would you describe the company culture?”

Asking this question screams, “I read somewhere to ask this question.” There are much better ways to research a company’s culture, such as speaking to current and former employees, reading online reviews and news articles. Furthermore, since your interviewer works for the company, they’re presumably comfortable with the culture. Do you expect your interviewer to give you the brutal truth? “Be careful of Craig; get on his bad side, and he’ll make your life miserable.” “Bob is close to retirement. I give him lots of slack, which the rest of the team needs to pick up.”

Truism: No matter how much due diligence you do, only when you start working for the employer will you experience and, therefore, know their culture firsthand.

  • “What opportunities are there for professional development?”

When asked this question, I immediately think the candidate cares more about gaining than contributing, a showstopper. Managing your career is your responsibility, not your employer’s.

Cliché questions don’t impress hiring managers, nor will they differentiate you from your competition. To transform your interaction with your interviewer from a Q&A session into a dynamic discussion, ask unique, insightful questions.

Here are my four go-to questions—I have many moreto accomplish this:

  • “Describe your management style. How will you manage me?”

This question gives your interviewer the opportunity to talk about themselves, which we all love doing. As well, being in sync with my boss is extremely important to me. The management style of who’ll be my boss is a determining factor in whether or not I’ll accept the job.

  • “What is the one thing I should never do that’ll piss you off and possibly damage our working relationship beyond repair?”

This question also allows me to determine whether I and my to-be boss would be in sync. Sometimes I ask, “What are your pet peeves?”

  • “When I join the team, what would be the most important contribution you’d want to see from me in the first six months?”

Setting myself up for failure is the last thing I want. As I mentioned, focus on the results you need to produce and timelines. How realistic are the expectations? It’s never about the question; it’s about what you want to know. It’s important to know whether you’ll be able to meet or even exceed your new boss’s expectations.

  • “If I wanted to sell you on an idea or suggestion, what do you need to know?”

Years ago, a candidate asked me this question. I was impressed he wasn’t looking just to put in time; he was looking for how he could be a contributing employee. Every time I ask this question, it leads to an in-depth discussion.

Other questions I’ve asked:

 

  • “What keeps you up at night?”
  • “If you were to leave this company, who would follow?”
  • “How do you handle an employee making a mistake?”
  • “If you were to give a Ted Talk, what topic would you talk about?”
  • “What are three highly valued skills at [company] that I should master to advance?”
  • “What are the informal expectations of the role?”
  • “What is one misconception people have about you [or the company]?”

 

Your questions reveal a great deal about your motivations, drive to make a meaningful impact on the business, and a chance to morph the questioning into a conversation. Cliché questions don’t lead to meaningful discussions, whereas unique, thought-provoking questions do and, in turn, make you memorable.

_____________________________________________________________________

 

Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.

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Canadian Natural Resources reports $2.27-billion third-quarter profit

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CALGARY – Canadian Natural Resources Ltd. reported a third-quarter profit of $2.27 billion, down from $2.34 billion in the same quarter last year.

The company says the profit amounted to $1.06 per diluted share for the quarter that ended Sept. 30 compared with $1.06 per diluted share a year earlier.

Product sales totalled $10.40 billion, down from $11.76 billion in the same quarter last year.

Daily production for the quarter averaged 1,363,086 barrels of oil equivalent per day, down from 1,393,614 a year ago.

On an adjusted basis, Canadian Natural says it earned 97 cents per diluted share for the quarter, down from an adjusted profit of $1.30 per diluted share in the same quarter last year.

The average analyst estimate had been for a profit of 90 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Oct. 31, 2024.

Companies in this story: (TSX:CNQ)

The Canadian Press. All rights reserved.

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Cenovus Energy reports $820M Q3 profit, down from $1.86B a year ago

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CALGARY – Cenovus Energy Inc. reported its third-quarter profit fell compared with a year as its revenue edged lower.

The company says it earned $820 million or 42 cents per diluted share for the quarter ended Sept. 30, down from $1.86 billion or 97 cents per diluted share a year earlier.

Revenue for the quarter totalled $14.25 billion, down from $14.58 billion in the same quarter last year.

Total upstream production in the quarter amounted to 771,300 barrels of oil equivalent per day, down from 797,000 a year earlier.

Total downstream throughput was 642,900 barrels per day compared with 664,300 in the same quarter last year.

On an adjusted basis, Cenovus says its funds flow amounted to $1.05 per diluted share in its latest quarter, down from adjusted funds flow of $1.81 per diluted share a year earlier.

This report by The Canadian Press was first published Oct. 31, 2024.

Companies in this story: (TSX:CVE)

The Canadian Press. All rights reserved.

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