Term Note
Are you familiar with Term Notes? Did you know this exclusive product of the Laurentian Bank features a far more attractive interest rate than guaranteed investment certificates?
What ’s a Term Note?
The Laurentian Bank Term Note is an investment product spanning up to 5 years. More specifically, it may or may not extend the full 5-year term, depending if the Bank exercises its option to redeem the investment on one of the anniversary dates. If the Bank exercises its option, than the
term of the investment will have been less than 5 years.
Advantage: the interest rate
So now you’re asking what’s in it for you. The advantage is the higher interest rate! The Term Note offers a far more attractive interest rate compared to guaranteed investment certificates. In addition, the Bank guarantees capital and return on the Term Note.
CASE # 1: The Bank does not exercise its option to redeem the Note
- You kept your Note for 5 years and reaped the benefits of an average interest rate of 4.57%.
- Had you invested in a 5-year GIC, the interest rate would have been 3.25%.
- Quite a difference in your pocket!
CASE # 2: The Bank exercises its option to redeem the Note after the first year
- You kept your Note for 1 year and reaped the benefits of a 4.00% interest rate, corresponding to the rate for the first year.
- Had you invested in a 1-year GIC, the interest rate would have been 2.75%.
- Once again, the advantages are significant and you still come out a winner!
| Below is the interest rat e offered on Term Notes issued in may 11 to june 30, 2006 | |
| Term note | GIC (April 24th rates) |
| 4.25% | CPG (taux grille au 24 avril 2006) |
| 4.35% | 2.75% |
| 4.50% | 2.95% |
| 4.75% | 3.00% |
| 5.00% | 3.05% |
| average rate: 4.57% | 3.25% |
| As you can see, the interest rate is very competitive! Whether the Bank redeems the note or not, you still come out a winner. |
|
If redeemed: total flexibility
If the Bank chooses to redeem the Note, you will receive a personalized letter, approximately 30 days in advance, informing you of the Bank’s intentions. Your advisor will also contact you to confirm the matter. When redeemed by the Bank, the entire capital invested in the Term Note will be deposited in your account. You may then dispose of the funds as you see fit, which includes the opportunity to reinvest in a new Term Note issue. After exercising its option, the Bank will probably issue new Term Notes with a more attractive interest rate than currently available GICs.
| CHARACTERISTICS | |
| Minimum investment | RRSP: $2,500 Non registered investment: $5,000 |
| Terms available |
|
| Eligibility to a registered plan |
|
| Eligibility to HBP and LLP | Not eligible |
| Access to capital | No access to fund until maturity date (5 years), except if redeemed by the Bank |
| Bank option to redeem funds | Yes, at each anniversary date of the Term Note (when interest rates decline) |
| Investor option to redeem funds | No option to redeem funds by the client |
| Interest payment | Interest remitted when funds are cashed, at each anniversary date |
| Interest rate | As per issue |
| Eligibility to deposit insurance | Not covered by the CDIC |
| Issuer | Issued and guaranteed by the Bank |
Summary
This investment product is suited for you if:
- You are looking for an investment offering noticeably higher interest rates than a GIC;
- You are looking for a secure investment that protects the invested capital;
- You are willing to accept redemption before the 5-year maturity date;
- You wish to be apprised of the future returns on your investment;
This investment product is not suited for you
- You expect to need your funds on a moment’s notice.
