Investors are encouraged to manage their investments to be insured with the Canadian Deposit Insurance Corporation, writes Peter Watson.
The banks that have failed in the US and Europe recently likely had customers that thought their bank would never go out of business. The reality is this can happen, not likely, but can happen.
The best safety available to you is provided under the Canadian Deposit Insurance Corporation.
Member institutions of CDIC offer insurance protection of up to $100,000 per eligible category. For example, if you have a savings account at your bank, the first $100,000 is insured. Money above that amount is not insured.
The key is the $100,000 limit applies to each separate category you have at the bank. If you had several hundreds of thousand dollars invested at a bank and that was diversified in several types of accounts, you could be insured.
That could include a savings account, tax-free savings account, RRSP, RRIF, RESP and if no one account had more than $100,000 you would be fully insured.
If you have a large amount of money and your intent is to buy Guarantee Investment Certificates, then consider holding the GICs at different banks while always keeping the invested amounts at each bank below the $100,000 limit.
Some investments are not covered by CDIC insurance. If you own mutual funds, stocks, bonds or exchange traded funds, those investments are not insured.
CIDC provides safety. Use it to your advantage.
Peter Watson is registered with Aligned Capital Partners Inc. (ACPI) to provide investment advice. Investment products are provided by ACPI. ACPI is a member of the Investment Industry Regulatory Organization of Canada. The opinions expressed are those of the author and not necessarily those of ACPI. Only investment-related products and services are offered through Watson Securities of ACPI. Peter Watson provides wealth management services through Watson Investments. He can be reached at www.watsoninvestments.com
