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Amid the carnage of rising interest rates, GIC returns are a good news story.

But as much as rates on guaranteed investment certificates have risen in 2022, investors are dissatisfied. One of the questions I hear the most from readers right now is why GIC rates aren’t going up along with the Bank of Canada’s overnight rate.

Guaranteed investment certificates were just a niche product a year or two ago - strictly for conservative investors who couldn’t stomach the risk of investing in stocks. Now, with interest rates rising, they’re a popular option that is drawing some scrutiny from a customer base hungry for still higher rates.

Specifically, people want to know why GIC rates are not increasing along with the Bank of  Canada’s trendsetting overnight rate and the big banks’ prime rate, which rises in sync with the overnight rate. “Why hasn’t Rob done a column on the refusal of Canadian financial institutions to increase GIC and savings rates following two increases in the prime rate since the summer?” a reader asked recently. “We’re getting ripped off.”

I actually did write on this topic over the summer, but an update is clearly needed after the latest overnight rate increase of 0.75 of a percentage point. GIC rates haven’t done much of anything since then.

Forget the Bank of Canada’s overnight rate if you’re a GIC buyer. The rates to follow are the yields on bonds issued by the federal government to finance its operations. For example, five-year GIC yields are influenced by the five-year Canada bond, which late last week had a yield of 3.3 per cent.

Five-year GIC yields at the big banks may go as high as 4.5 per cent on a special offer, while seven alternative banks offered 5 per cent or a tiny bit more. The markup over the five-year Canada bond yield reflects a bank’s thinking on balancing revenue and profit goals with competitiveness that brings in customers.

Alternative banks need to work harder to attract clients, so they offer better GIC rates than the big banks. But as scrappy as they are, these alternatives have limits to what they can offer clients and still meet their profit targets. A dwindling number are willing to offer 5 per cent for five years. A couple of months ago, there were as many as 11 alternative banks offering this deal.

Rates on savings accounts aren’t tied to any particular benchmark interest rate. Basically, a bank sets its savings rates according to how much it’s willing to pay depositors for money that can be lent out. Savings rates have been similarly competitive to GIC rates lately, with a few alternative players offering 3 per cent or more.

Want a savings vehicle that has so far responded to increases in the Bank of Canada’s overnight rate? Try cash-alternative exchange traded funds, which you buy and sell like a stock. These ETFs hold cash deposited in bank accounts that pay better rates of return than retail bank savings products. The after-fee yield in late September was about 3.6 per cent, up 0.75 of a percentage point from where they were before the last increase in the overnight rate.

-- Rob Carrick, personal finance columnist

Also see: The war on savers is over - sort of

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Stocks to ponder

Jamieson Wellness Inc. (JWEL-T) Given the sharp correction in many stocks, it may soon be a good time for investors to put some beaten-down stocks on their radar screens, and this one is worth considering. The share price of this consumer staples stock has declined 10 per cent month-to-date and is down nearly 18 per cent year-to-date. As Jennifer Dowty tells us in this profile of the company, earnings expectations are improving despite the uncertain economic outlook, and the stock has provided consistent double-digit annual dividend growth.

The Rundown

How the Stable Dividend portfolio fares in uncertain times

While the Stable Dividend portfolio does not offer perfect protection against downturns, it has fared better than the S&P/TSX Composite Index on most occasions. It also tends to hold utilities, telecoms and other seasoned firms with generous dividend yields that are likely to survive all but the worst of calamities. Norman Rothery takes a look at its track record and which stocks it currently holds.

The terrifying - and highly profitable - journey of a bank stock

When you own an excellent company, you are much better off holding the shares through thick and thin than trying to trade your way through the market’s gyrations, says John Heinzl. He illustrates this point by examining Royal Bank of Canada’s stock performance over the past two decades.

This new ‘green’ fund shows why investors need to read the fine print

The devil, they say, is in the details. This is especially true when it comes to investing. Recently, Gordon Pape was researching so-called “green” funds, looking for those that are beating the market. He came across one that few people have heard about, despite the fact it has a good, if short, track record. It’s the Purpose Global Climate Opportunities Fund (PFC4700.CF, CLMT-T). The fund’s stated objective is “to capture the tailwinds from the fight against climate change by investing in transformational technologies, energy transition opportunities, and sustainability leaders across the world.” But as Gordon tells us, some of its holdings may come as an unpleasant surprise to dedicated environmentalists.

The U.S. dollar has soared. Here’s why it may be near a peak

The U.S. dollar has been a standout currency in 2022, rewarding Canadian investors with bigger dividends and an offsetting tailwind for the value of their struggling U.S. stocks and bonds. But with the dollar trading at multi-decade highs, a number of observers expect that the greenback could be approaching peak strength. David Berman looks at where the greenback - and the loonie - may be heading next.

How much should you bet on U.S. assets?

If you think the United States is destined to be the king of the global economy, you really shouldn’t own much more than U.S. stocks and U.S. bonds. On the other hand, if you think the pendulum is due to swing back, now is a great time to go shopping in non-U.S. markets because of their relative cheapness. Ian McGugan explains why he thinks the U.S. will soon lose its lustre.

Why this money manager bought into oil, waste management and packaging stocks

There’s a lot of negative sentiment in the stock markets today, which money manager Mike Archibald believes is a good sign for investors in the long term. He believes inflation has peaked in North America and says stock markets are forward-looking and have discounted much of the negative news that comes with rising costs and interest rates. The portfolio manager at AGF Investments, who oversees about $375-million in assets, tells Brenda Bouw what he’s been buying and selling of late.

Others (for subscribers)

The most oversold and overbought stocks on the TSX

Monday’s analyst upgrades and downgrades

Monday’s Insider Report: This grocery CEO is a buyer after an earnings miss sends shares tumbling

Rob Carrick: How to plan a B.Y.O.P. retirement, as in build your own pension

Globe Advisor

Home improvement sector faces more challenges until interest rates hikes peak

Retirement boom raises concerns over advisor compensation

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What’s up in the days ahead

In the wake of the Bank of Nova Scotia announcing its new CEO, David Berman explains why you should never buy a stock based solely on leadership.

Click here to see the Globe Investor earnings and economic news calendar.

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Compiled by Globe Investor Staff