Quote:
Originally Posted by Slava
Well that's why things like GICs or bonds or potentially high-interest savings accounts make sense. If you have the mortgage come up in three years, you can buy bonds that mature ahead of that and earn a better rate of return than just paying the mortgage. When the bond matures, you plunk it on the mortgage at renewal and you have paid more down on the mortgage than you would've today and with low risk (depending on the bonds you buy...or really have someone who knows what they're doing buy for you).
And...worst case scenario, you can sell those bonds ahead (again, assuming that you aren't buying a riskier high-yield bond).
And of course, with something like a GIC, you end up with ~5% for three years, and it's virtually guaranteed.
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You and others are right, GIC would be different. I mean sure, if you have three years left on a mortgage at 3% you'd be better off by a little bit by putting that in a three year GIC and making more. But ultimately it's still with an eye to paying off your mortgage and having that be your focus, with the GIC as a means to an end in that regard. Have to consider taxes on the interest as well.