Government of Canada Money Market Strips are created when the
interest payment coupons are separated from the principal portion
of a government bond. Both are then sold as individual investments.
They are always sold at a discount and mature at face value. The
difference between your purchase price and the maturity value is
your interest income. Strips with maturities up to 18 months are
known as money market strips. They usually offer slightly higher
returns than T-Bills of similar terms and the Government of Canada
guarantees their maturity value. Like all money market investments,
they are fully marketable and can be sold at market value at any
time. Common CharacteristicsDollars to Invest/Time Horizon
Minimum investment (at face value) is $5,000 for six months to 18
months.
Risk/Return
Fully guaranteed by the Government of Canada. There is
essentially no risk with any investment held to
maturity--every aspect of the investment is guaranteed, regardless
of the size of the investment. Offers slightly higher yields than
Government of Canada T-Bills of similar term.
Liquidity
Highly liquid; may be sold at any time, with settlement within one
business day.
Income
Earnings are distributed at maturity.
Key Benefits- Highest guarantee of principal available
of any investment sold in Canada, regardless of the size of the
investment.
- Fully guaranteed principal and return if
held to maturity.
- Higher yielding than term deposits, GICs
and Government of Canada T-Bills.
- High degree of liquidity.
- Low minimum investment required.
- RSP/RRIF eligible. Investments are
considered Canadian content for RSP purposes.
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