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Investing & Retirement - Other Investments

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Visit our Investments section of our website or visit our contact page and submit your question through the "Who can help me?" link or call one of our financial experts at any of our three branches.

What is a Term Deposit (TD)?
What is a Guaranteed Investment Certificate (GIC)?
What is an Index-linked Term Deposit?
What is a Canada Savings Bond (CSB)?
What formats of Canada Savings Bonds exist?
What are some common features of CSBs and CPBs?
Who sells Canada Savings Bonds?

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1. What is a Term Deposit (TD)?

A term deposit is a contractual obligation between a financial institution and an investor. The financial institution agrees to pay the negotiated and the investor deposits their funds for a specified length of time (a term). The term usually ranges from 30 days to 365 days (short term) to longer terms of one to five years. All deposits are 100% protected and insured through The New Brunswick Credit Union Deposit Insurance Corporation (NBCUDIC). A peace of mind only offered within the Credit Union system.

*There are two categories of term deposits - redeemable and non-redeemable.

Redeemable Term Deposit - the investor can cancel prior to the maturity date. There may be an interest penalty if withdrawn prior to maturity.

Non-redeemable Term Deposit - the investor cannot redeem (cash in) their term deposit before maturity.

*OMISTA Credit Union only offers redeemable term deposits.

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2. What is a Guaranteed Investment Certificate (GIC)?

Much like term deposits, a GIC is a contractual obligation between a financial institution and an investor. The financial institution agrees to pay the negotiated and the investor deposits their funds for a specified length of time (a term).

Today, GICs and Term Deposits are used almost interchangeably. The difference is, only trust companies can issue GICs and all GIC investments are guaranteed by the trust company and 100% protected and insured through The New Brunswick Credit Union Deposit Insurance Corporation (NBCUDIC). A peace of mind only offered within the Credit Union system. This extra level of security is what attracts most people to GICs over term deposits.

Another difference withing OMISTA Credit Union is that only Non-redeemable GICs are available. For a redeemable format we offer term deposits.

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3. What is an Index-linked Term Deposit?

Index-linked deposits are a type of deposit where the rate of return is linked to he performance of the stock or bond market index. An index is comprised of a group of stocks or bonds. Currently, OMISTA Credit Union index-linked term deposits are linked to the performance of the S&P/TSX 60, which represents the 60 largest companies on the Toronto Stock Exchange.

This is where GIC/term deposit and index-linked investments differ. The rate of return for indexed-linked products is determined by how well the stocks and bonds that comprise the relevant index perform in the marketplace. The GIC/TD rate of return is predetermined by the financial institution and fixed for the term.

The primary appeal of index-linked term deposits is that the principal amount invested protected and insured through The New Brunswick Credit Union Deposit Insurance Corporation (NBCUDIC). A peace of mind only offered within the Credit Union system.

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4. What is a Canada Savings Bond (CSB)?

A bond is a debt (an "I owe you") which the issuer of the bond (in this case, the Federal Government) promises to pay the holder (owner) a specified amount of interest for a specified length of time and to repay the loan (the original amount paid for the bond) at maturity. A second type of CSBs and Canada Premium Bonds, CPBs (formerly known as Canada RRSP bonds).

5. What formats of Canada Savings Bonds exist?

Canada Savings Bonds and Canada Premium Bonds are offered in following two formats:

Regular Interest Bonds (R-bonds) - earn simple interest on a monthly basis based on the rates announced by the Minister of Finance. Interest is paid to the bond owner on each annual anniversary date or when the bond is redeemed (cashed in). R-bonds are sold in various denominations ranging from a minimum of $300 up to $10 000.

Compound Interest Bonds (C-bonds) - interest is calculated monthly and compounded annually at the rates announced by the Minister of Finance until the bond matures or is redeemed (cashed in). Denominations of C-bonds range from a minimum of $100 up to $10 000

6. What are some common features of CSBs and CPBs?

100% guaranteed by the Government of Canada

$200 000 ownership limit per issue

May be purchased only by Canadian residents; no age restrictions

Purchaser can register ownership in the name of:
An individual (either the owner or someone else)
Co-owners with or without a survivor
An estate
A personal trust
A sole proprietorship
A charitable organization
A registered plan (RRSP, RRIS, RESP, etc.)

7. Who sells Canada Savings Bonds?

CSBs and CPBs are available through OMISTA Credit Union. You can meet with an OMISTA Expert at any of our three branches, or your Credential Financial Strategies Inc. Representative Ozzie MacKay for more information on any of our investments.

Credential Financial Strategies Inc. is a member company under Credential Financial Inc., offering financial planning, life insurance and investments to members of credit unions and their communities. Credential® is a registered mark owned by Credential Financial Inc. and is used under licence.

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