White said they’d be better to stick with their investment plan and benefit from the market recover because “this is probably the best opportunity to invest.” He cautioned advisors not to abandon stocks and bonds and crystalize client losses for their longer-term portfolios.
Chad Larson, the senior portfolio manager, senior investment advisor, and founder of MLD Wealth Management with Canaccord Genuity Corp., agreed. He noted that investors are nervous about the market, so the benchmark interest rates of 4% for GICS is compelling for those with cash on the side.
While GICs are a great place to park short-duration cash, he said, “I would hate to see clients trapped in a GIC, even if the rate looks juicy today, and not able to take advantage of the market pricing”.
He said Canadian money market funds, which offer daily liquidity, are better than locked-in GICs. “A Canadian money market fund that’s holding Canadian treasury bills is as safe, from a risk perspective, as a GIC,” said Larson. “I wouldn’t ever sacrifice daily liquidity for 10 basis points or a quarter point difference of yield.
“You don’t want to lock up your money in a GIC for six months and lose the opportunity of a lifetime if it comes across your desk. Earning 10 or 25 basis points to miss out on the opportunity of a lifetime makes no sense to me.”
