The Globe and Mail

This no-markup pricing advantage was verified in a test this week in which the yield on six different government and corporate bond issues was compared simultaneously at Scotia, Qtrade and three competitors. Scotia’s yields were the highest in all cases, with gaps of as much as 0.27 of a percentage point. Qtrade hadn’t introduced wholesale pricing when the test was done, but it was already very close in the way it priced bonds.

Another strategy for maximizing your returns from safe investments is to look at replacing bonds with GICs from credit unions, trust companies and small, alternative banks. Advisers generally have access to a variety of third-party GICs, and online brokers offer them, too.

Thanks to deposit insurance, GICs offer comparable security to government bonds. And yet, the returns can quite often be better than you can get even through wholesale pricing at Scotia iTrade and Qtrade. For example, Qtrade had a 3-per-cent, five-year GIC available this week from the B.C. credit union Coast Capital Savings (unlimited deposit insurance is available through a provincial credit union plan backed by the B.C. government).

There’s little chance for the average individual investor to get a 3-per-cent yield these days in a five-year government bond, federal or provincial. Corporate bonds may offer more, but there’s a higher level of risk.

One drawback with GICs is that unless they’re cashable, they can’t easily be sold before maturity like a bond. Then again, a price decline in a bond will be reflected in the value of your overall investment account, whereas a GIC remains impervious. For investors who are hyper-sensitive to losing money, that’s a significant psychological advantage for GICs.

Whatever safe investments you’ve been using, it’s time to stop being a passive consumer who turns his or her brain off after hearing the phrase “low risk.” In investing, it’s possible to be both safe and sorry.

Up From Bondage

When interest rates are as low as they are now, investors need to do all they can to maximize the yield they get from bonds. One way to do that is to ensure you're getting a competitive yield when buying bonds from your investment dealer. Here's how the yields on six government and corporate bonds compare at four online brokerage firms. Each is compared to the wholesale yield, which is what big institutional investors get. Wholesale data was supplied by the CBID marketplace operated by Perimeter Markets Inc., which gathers bond prices from a wide number of dealers.

Methodology: Bond yields at each firm were compared simultaneously for orders of $5,000.

How to Read Bond Info: The issuer of the bond is mentioned first, then the coupon or annualized interest payout at issue. Next is the year, month and day the bond matures.

Replace Money Market Funds

Investment savings accounts that trade like mutual funds are an ideal replacement for high-cost, low-return money market mutual funds. Here’s a rundown on some of the options out there:

Follow me on Facebook. I’m at Rob Carrick – Personal Finance