Contact: Judy Culford

November, 2002

Phone: (519) 663-2252

Millions Unknowingly Turn Down
GUARANTEED Returns of 26% or More

For many investors, getting a 2% return from this year's Canada Savings Bonds or a GIC looks great compared to recent stock market declines of 20-40%. "Ironically, millions of Canadians unknowingly turn down the opportunity to earn guaranteed returns of 26% or more", says Talbot Stevens, a financial educator and author of "Financial Freedom Without Sacrifice" and "Dispelling the Myths of Borrowing to Invest".

"Conservative investors are frustrated with interest rates near 40-year lows, and equity investors have suffered even more as we struggle through the third-largest bear market this century. While these realities have made it difficult for investors, most Canadians can get guaranteed double-digit returns, without risk", claims Stevens. "Most people aren't aware of the opportunity because we weren't taught financial basics and these ‘investments' aren't sold by financial institutions."

Almost everyone has debt. Approximately half of Canadians do not pay off their credit cards in full every month. But most people don't realize that simply paying down an 18% credit card is the same as getting a GIC paying 26% or more. For someone in a 30% tax bracket, a 26% GIC return is results in an after-tax return of 18%. Paying down any personal debt is a simple and easy way to produce an after-tax return of the interest rate charged - guaranteed.

The effective return from charge cards is even greater. Department store charge cards typically charge 28.8% interest. After accounting for the monthly compounding, the effective annual interest rate is 32.9%. To get a 33% after-tax return, someone in a 30% tax bracket would need a 47% GIC!

For those disciplined enough to pay off their expensive cards, even paying off mortgages or car loans can result in an effective return. The table shows the equivalent GIC return that results from paying down personal debts for someone in a middle 30% tax bracket.

The High Returns of Paying Down Debts
Type of Debt Typical Interest Rate Effective GIC Return*
Charge Card 32.9% 47%
Credit Card 18.5% 26.4%
Personal Loan 10% 14.3%
Mortgage 5% 7.1%
*Assuming a 30% tax bracket

Strategies for getting high returns guaranteed, and dealing with debt

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Talbot Stevens is a financial educator, industry consultant, and author of "Financial Freedom Without Sacrifice" and "Dispelling the Myths of Borrowing to Invest". For other story ideas, visit the Free Resources menu of For more information, contact Judy Culford, Communications Director for Talbot Stevens, by calling (519) 663-2252, or emailing