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Investment Options
Government of Canada Money Market Strips
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 Characteristics
Dollars 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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