Bank of Montreal (BMO) has recently introduced a new Guaranteed Blue Chip GIC product for investors who are looking to make a bit of money on their investments, while protecting themselves against any potential downsides.
What is a Blue Chip product?
A Blue Chip is a nationally recognized, well established and financially sound company. Blue Chip companies are known to go through downturns and operate profitability in the wake of adverse economic conditions.
Blue Chip stocks are seen to be as a less volatile investment, compared to owning shares in companies without Blue Chip status, because Blue Chips have an institutional status in the economy.
On an interesting note, the name “Blue Chip” is derived from poker. In the simplest sets of poker, we see poker chips include white, red and blue chips; tradition dictating that the blue chips are the highest in values.
What is the product BMO introduced?
BMO introduced a new Guaranteed Blue Chip GIC product, which is a great product that they have creating. They have created a portfolio of 10 Canadian Blue Chip stocks, each accounting for 10% of their holdings.
Having said that, depending on how these stocks do, you would get a return of between 0.2% and 4.2%, over the course of 1 year. The tradeoff in this situation is having asset holding in each stock, however you get a guaranteed 0.2% return, at the cost of giving up returns beyond 4.2%. For absolute safety, you may prevent yourself from potentially earning a lot of money, however for investors who have an issue with risk, this is definitely not a bad deal for them.
Personally I find that this is a great investment option for anyone who is looking to make some money, but still a bit nervous to dive into the deep waters of investing. This investment provides absolute safety, with a guaranteed return investment of 0.2%. You cannot go wrong with that at all.
The BMO Guaranteed Blue Chip GIC Holdings include the following:
- Power Corporation of Canada (POW)
- Goldcorp Inc. (G)
- SNC-Lavalin Group Inc. (SNC)
- Thomson Reuters (TRI)
- Fortis Inc. (FTS)
- Toronto-Dominion Bank (The) (TD)
- Canadian Natural Resources Ltd. (CNQ)
- Brookfield Properties Corp. (BPO)
- TransCanada Corp. (TRP)
- Rogers Communications Inc., Class B (RCI.B)
Remember, these 10 BMO Guaranteed Blue Chip GIC Holdings account for 10% of their holdings.
BMO has been introducing some great products and services lately. I recently spoke about BMO’s introduction of MoneyLogic, a new personal financial management service that allows clients to have complete control over their finances in such a way they know exactly where they are heading.
This BMO Guaranteed Blue Chip GIC Holding is a great investment product is a great choice for the “safe” investor. You are guaranteed to make money; the only problem is that the cap is at 4.2%. You can always go out and purchase these stocks on your own, however you are not guaranteed to make a profit.
Regardless of whether you choose to invest or not, it is great to see BMO introducing products for all types of investors.
How do you feel about this particular investment product?
image source: Sweet One