Canada Savings Bond
Canada Savings Bonds are investment instruments offered by the government of Canada on sale between October and April every year. Unlike a true marketable bond, Canada Savings Bonds or CSBs are a debentures. The financial product is issued by the Bank of Canada and offers a competitive rate of interest and guaranteed minimum interest rate.
Canada Savings Bonds- Purchasable in regular and compounding interest. These bonds are cashable at any time and come in denominations of $100, $300, $500, $1000, $5000, and $10000 (regular interest bond's lowest denomination is $300). Interest rate is guaranteed for 1 year and fluctuate with market conditions for the remaining 9 years until its maturity. They are green, and pictures the Clock Tower of the Parliament building in Ottawa.
Canada Premium Bonds- Purchasable in regular and compounding interest. These bonds differ from the regular bonds in that they are only cashable in each anniversary month of each year. They come in denominations of $100, $300, $500, $1000, $5000, and $10000 (regular interest bond's lowest denomination is $300). They are sold with rates up to year 3 with each subsequent year offering higher interest. The interest rate fluctuates for the remaining 7 years with market conditions until its maturity. Previously, the rates were determined for 5 years and fluctuated for the last 5 years. The bonds are maroon in color and feature a picture of the Library of Parliament in Ottawa.
Normally CSBs are purchased at a financial instituion or online at the CSB website and certificates are mailed to the investor. However there are a few plans available in which certificates are not issued.
- Canada RSP is a no-fee registered retirement savings plan (RRSP) designed specifically for holding compound interest Canada Premium and Canada Savings Bonds
- Canada RIF no-fee registered retirement income fund (RRIF) designed specifically for holding the Canada Premium and Canada Savings Bond directly in a RRIF
- Payroll Deduction- Employers can provide employees this plan during sale periods. Employees choose how much they would like deducted off their paycheques and it is automatically saved until the employee would like to withdrawal. This is also eligible for the Canada RSP.
