Canadian High Interest Savings Bank Accounts

http://www.hsbcdirect.ca/1/2/3/

HSBC Direct
0.80% Everyday Rate

Am I ever glad I pulled all (well, most) of my money out of these "high interest savings accounts" back in June (I've still got my emergency cash fund with CTFS for now). Not to brag, but I've made more money in the financial markets over the past three months than I would have made at current "high interest" savings rates in over FIVE YEARS. I think the markets still have some steam left before the free money (i.e. central bank money printing presses) starts to peter out… probably late winter 2010 or early spring. I highly recommend investing in dividend-paying blue chips like the Canadian Banks instead of keeping money in these savings accounts. As an example, national Bank of Canada (NA) closed yesterday at $60 per share, and pays a big quarterly dividend of $0.62/share. Let's say you buy $5000 worth of NA at $60 which gets you 83 shares plus commission. Four times per year, National Bank will pay you a dividend of 0.62 x 83 = $51.46. This is $205.84 per year. That works out to a yield of 205.84/5000 x 100 = 4.1%. That's almost DOUBLE what the highest savings account pays (People's Choice at 2.1%). As an added bonus, dividends from Canadian companies qualify for the dividend tax credit, so you'll pay less tax on that $205.84 than you would have paid if you had to claim it as interest income from a savings account. Yes, the stock price will fluctuate, but as long as you hang onto the shares, you'll keep getting the dividend, and Canada's banks aren't going to be cutting their dividends anytime soon (they are among the best capitalized banks in the world). Just something to think about.