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Ken Thorpe, Triglobal Capital Management: "So much depends on client sophistication and financial means that I am always loath to generalize.
"Although I have offered GICs for many years, the demand is continuing to diminish with the ongoing low interest rates.
"Where GICs are required, I favour terms from one to three years. As replacements for the capital-protected part of portfolios, I recommend, depending on client sensibility, GICs, real-return bond funds, mixed income funds (dividend-paying stock, income trusts and bond combos), first-quartile bond funds, principal-guaranteed bank-issued notes and Clarington Target Click funds."
Martin Garneau, Majesta Financial Partners: "Canadians seeking regular investment income are in a difficult position to say the least.
"Interest rates are so low, most investors are forced to take on levels of risk that they would probably wish to avoid if they could afford to.
"A prudent mixture of conservative dividend-paying stocks, income trusts, preferred shares and corporate and government bonds is required these days to provide adequate income in a tax-efficient manner outside of one's RRSP.
"In my practice and as possible solutions, I am recommending to my income-seeking clients the TD Monthly Income fund outside of their RRSP and the Acuity Pooled Fixed Income fund within their RRSP.
"Both funds have performed well at a modest level of risk in this low interest-rate environment and with low fees.
"I am not a fan of GICs, index GICs, linked notes or CSBs, and do not recommend them.
"They do not provide adequate income, are often expensive, frequently restrictive, and the principal guarantee of some of these products is essentially of no value as I see it."
Steven Wheeler, Freedom 55 Financial: "The keys are the length of time the investor has before he needs the money and whether the money will be registered or non-registered.
"Redeemable GICs, a money-market fund or a savings account with ING are okay for money that is needed within a one-to-three year framework.
"Mid-term (three to five years), bond funds provide diversification. I recommend the TD Bond Fund, a historically strong performer. For non-registered funds, preferred shares of blue-chip firms are worth considering.
"Longer-term, income trusts, high-income funds and dividend-generating investments (particularly Canadian banks) are my preference.
"I don't like protected notes because of the limited market to resell and the length of time they need to be held."
Jean-Pierre Duguay, Groupe Financier Everest: "There is a large variety of income products on the market. Suitability depends on the customer. The only product I have strong feelings against are stock-indexed GICs.
"Their overall record appears lacklustre and I feel they lack flexibility when building one s portfolio.
"When considering income products for an RRSP, strip bonds first come to mind. They offer a good safety of capital, they are flexible since they can be sold on short notice, interest is compounded and they are ideal to build funds flows over the years.
"Laddered GICs are also a good option for the investor who has a smaller portfolio. Index-linked notes, guaranteed by a bank, should also be considered for the investor who wants to diversify his investments. They can make up 10 to 15 per cent of one's portfolio.
"I recommend the Index Optimizer 14 and the Blue Chip Optimizer 1, both issued by Open Sky Capital and guaranteed by Citigroup.
"As for income funds, one could consider bond funds, but also diversified income funds that are made up of bonds, income trusts, dividend stocks.
"One could consider Fidelity Monthly Income Fund or Guardian Monthly Diversified Income fund.
"Outside an RRSP, one must first take into account the after-tax return of the various products available. Interest income from GICs or regular bonds is safe, but the after-tax return is often less than the rate of inflation.
"Preferred shares of good quality companies should be considered by the investor who is tax-conscious, as should income funds such as Acuity High Income Fund, CI Growth and Income Fund, Standard Life Monthly Income Fund and Northwest Growth and Income Fund."
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