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Westoba Credit Union

Frequently Asked Questions for Index-Linked Term Deposits

What is an Index-Linked Term Deposit?

An Index-Linked Term Deposit is a certificate with a rate of return based solely on the performance of the S&P/TSX60 Index. Westoba offers three or five-year non-redeemable terms. Your initial investment is guaranteed.

What is the S&P/TSX60?

It’s an index tracking 60 foremost companies in leading Canadian industries. Below is a breakdown of the sectors this index consists of as of April 2019.

How do I know if this financial solution is right for me?

An Index-Linked Term Deposit might be right for you if you:

  • have a three to five year investment timeframe;
  • want a higher return that the markets can potentially provide without the risk;
  • don’t need to access the funds for the investment term; and
  • have a low tolerance for risk.

How can I track performance?

There is no “market value” of Index-Linked Term Deposits since they are non-redeemable before the end of the term and have no secondary market.
The following graphic shows the historical performance of the S&P TSX60. Note: past returns do not indicate future performance.


Click here  to view the Central1 Performance of Index-Linked Term Deposits for three years.

Click here  to view the Central1 Performance of Index-Linked Deposits for five years.

How is the return on Index-Linked Term Deposits calculated?

Click here to view examples of the calculation formula.

Are there any fees?

No. There are no commission, management or administration fees.

Is my principal deposit guaranteed?

Yes! Your initial investment is 100 %. This means that you can take advantage of market gains without any downside risk.

Can I get an Index-Linked Term Deposit held in a RRIF?

No. A Registered Retired Income Fund (RRIF) is an income producing product. Index-Linked Term Deposits are non-redeemable, and therefore cannot payout the minimum payment as required by legislation. If you rely on your investments for a steady flow of income, an Index-Linked Term Deposit is not right for you. Talk to a Financial Planner  about your goals and they will create a Financial Plan specific to you!

Since an Index-Linked Term Deposit is non-redeemable, what happens in the event of a death?

The Index-Linked Term Deposit can be transferred to the estate or redeemed to the estate. It is important to know that there will be zero interest paid on the investment in the case of early redemption.

What kind of impact will an Index-Linked Term Deposit have on my personal tax return?

Any money you make on an Index-Linked Term Deposit is considered interest income. Canada Revenue Agency (CRA) requires people to include any interest income or loss on their tax returns annually. The member should consult CRA’s Regulation 7001, subsection 16(6) for details.

If you’re considering investing significant amounts of money (greater than $50,000) in Index-Linked Term Deposits, we recommend you consult with your accountant or tax advisor prior to securing the investment. Our experienced Financial Planners are also available to meet with you to review your goals and help create a Financial Plan specific to you. Call 1-877-WESTOBA or click here to make an appointment.