Since the beginning of this year, the market related to interest rates has been severely depressed. The following column should shed some light on what’s happening. For example, here’s a question I often hear: “What should I do with my income securities?”

Do you have GICs (guaranteed income certificates), or terms ending or new money that you would like to place in this kind of product?

The simplest thing to do is to take a one-year term. At the moment, you would obtain almost the same rate of interest for a period of one to five years.

Do you have a portfolio of bonds with varying maturity dates and also with different credit ratings?

To assess a portfolio of revenue securities composed of bonds or coupons, you should check the average duration of the maturity date, the average earning power of your interest portfolio and also the rating of the issuers. After that, you can determine which bond could be complementary to your portfolio to reduce its term and at the same time increase its quality.

Do you have preferred shares in your portfolio?

Securities in this sector have fallen markedly. Each position should be analyzed by asking oneself some good questions. Is recovery possible? Should I sell the position? Should I acquire other positions in the sector to diversify my risk and reduce my average cost? In view of the slump in this sector, why not replace a corporate bond with a high-quality preferred share?

As you can see, the situation is not simple in interest-bearing securities, unless your portfolio is composed only of GICs.

We also offer a second opinion service on a revenue portfolio to provide you with appropriate recommendations. Don’t hesitate to contact me. I would be pleased to offer assistance. In the meantime, let’s climb onto our bikes and perhaps meet by chance on the paths and roads.