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Brokerage investment savings accounts
February 5, 2024
6:07 am
RetirEd
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If an account is only redeemable in whole, make your investment in several parts. For example, take 10K as 1K+2K+3K+4K and then you can redeem 1, 2, 3 or 4 as your needs dictate.

RetirEd

February 11, 2024
12:40 pm
fsabbagh
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seh said

Who is offering 4.8% cashable? Is that a 1 yr. term? Is it partially redeemable (many are not)?  

CIBC branch for 1 year.

February 11, 2024
12:41 pm
fsabbagh
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Norman1 said
Since last update two months ago, rates unchanged:

ISA (Canadian Dollars) Rate
BMO High Interest Savings Account (BMT104) 4.75%
Scotiabank Investment Savings Account, Series A (DYN6000)
Equitable High Interest Savings Account, Series A (EQB1000) 4.65%
Home Trust High Interest Savings Account, Class A (HOM100)
Manulife Bank Investment Savings Account (MIP510) 4.60%
B2B Bank HIIA, Series A (BTB100) 4.55%
NBI Altamira CashPerformer Account, Series A (NBC100)
RBC Investment Savings Account, Series A (RBF2010)
Renaissance High Interest Savings Account, Series A (ATL5000)
TD Investment Savings Account, Series A (TDB8150)

  

I was speaking to CIBC and they said a money market fund can give you 5% or a bit more. Question: Why do you invest in ISA instead of a Money Market fund?

February 11, 2024
12:56 pm
Loonie
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The rate in a money market fund is not guaranteed.
Banks always describe best case scenario in order to get you to buy in as they will not be financially responsible for the rate, so it gives the bank more flexibility. When they said "or a bit more", that was your cue to be aware that the rate of return is uncertain.

With an ISA, you will get the posted rate, but it is subject to change of course, like any savings account.

That said, it could turn out that you do better with the money market fund - or not.

February 11, 2024
1:05 pm
AltaRed
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Agreed. The yield on a money market fund is nothing more than the pass through of the income from the underlying holdings net of MER. The holdings are all short term, e.g. deposits, 30 day Tbills, banker acceptances. One can check that out for themselves. The yield of a MMF will drop within a period of about 30 days of the BoC reducing interest rates.

February 11, 2024
1:21 pm
kesa
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fsabbagh said

I was speaking to CIBC and they said a money market fund can give you 5% or a bit more. Question: Why do you invest in ISA instead of a Money Market fund?  

CDIC, capital is protected (within limits).

MMF, capital is not protected.

February 11, 2024
1:42 pm
AltaRed
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kesa said

CDIC, capital is protected (within limits).

MMF, capital is not protected.  

That is a good reason but I have never feared lack of CDIC protection in instruments like MMFs that I would consider. The underlying holdings are highly liquid and high quality and backed by the reputation of the provider. Imagine a big bank allowing their MMFs breaking $10.

February 11, 2024
2:03 pm
kesa
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February 11, 2024
4:47 pm
kesa
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February 11, 2024
9:19 pm
Doug
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AltaRed said

That is a good reason but I have never feared lack of CDIC protection in instruments like MMFs that I would consider. The underlying holdings are highly liquid and high quality and backed by the reputation of the provider. Imagine a big bank allowing their MMFs breaking $10.  

I agree with this. The only quibble I would have with your post above is that the distribution yield for money market funds is the gross yield. The MER is only charged once per year, and comes out of the net asset value of the fund; it doesn't affect the distribution yield. Since most MMFs use market making techniques to try and maintain a constant $10.00 Net Asset Value Per Unit, which they generally do a pretty good job of, one can rely on the gross yield as their actual distribution yield. sf-cool

The one thing I will say is that is cautionary regarding MMFs is when the credit markets are in periods of turmoil, the market maker/manager of the fund may be unable to maintain a $10.00 NAVPU, or may temporarily suspend redemptions. So that is something to consider. But otherwise, if the manager of the fund is reputable, it's not different than exceeding one's CDIC deposit insurance limits with a CDIC member. 🙂

Cheers,
Doug

February 12, 2024
12:17 pm
Loonie
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As always with any fund, READ THE PROSPECTUS to know what you are getting into.

February 12, 2024
1:40 pm
AltaRed
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Loonie said
As always with any fund, READ THE PROSPECTUS to know what you are getting into.  

Agreed. Doug is not quite correct though. Fund fees (costs) are calculated daily and paid monthly out of the assets (including investment income) of the fund. That is to ensure those selling units any given day of the month (or year) are treated as fairly as possible, i.e. not paying a disproportionate share of the fees. The fees are deducted from the actual gross yield of the underlying investments in the fund resulting in the advertised distribution yield being what is paid out to investors.

What can happen, and has happened in the past when interest rates were extremely low, e.g. in the order of 0.25%, is the fund manager would reduce fees to ensure distributed yield was not less than zero, and NAV of the MMF units did not drop below $10 per unit.

February 17, 2024
6:44 am
Norman1
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Since last update, rates unchanged. Renaissance changed the symbol for its HISA:

ISA (Canadian Dollars) Rate
BMO High Interest Savings Account (BMT104) 4.75%
Scotiabank Investment Savings Account, Series A (DYN6000)
Equitable High Interest Savings Account, Series A (EQB1000) 4.65%
Home Trust High Interest Savings Account, Class A (HOM100)
Manulife Bank Investment Savings Account (MIP510) 4.60%
B2B Bank HIIA, Series A (BTB100) 4.55%
NBI Altamira CashPerformer Account, Series A (NBC100)
RBC Investment Savings Account, Series A (RBF2010)
Renaissance High Interest Savings Account, Series A (ATL5070)
TD Investment Savings Account, Series A (TDB8150)
February 17, 2024
11:38 am
Dean
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.
Thanks for the update , Doug.

Yes, there's been no significant changes in ISA rates for quite some time now.
I wonder when that bubble will burst.

And for those who may be interested, TDDI's USD ISA (TDB8152) rate also remains unchanged, @ 4.90%.

    Dean

sf-cool " Live Long, Healthy ... And Prosper! " sf-cool

February 19, 2024
6:35 pm
zgic
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@Norman1: Do we buy the Series A or Series F funds?
What is the difference between the 2
Thanks

February 19, 2024
6:53 pm
Doug
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Dean said
.
Thanks for the update , Doug.

Yes, there's been no significant changes in ISA rates for quite some time now.
I wonder when that bubble will burst.

And for those who may be interested, TDDI's USD ISA (TDB8152) rate also remains unchanged, @ 4.90%.

    Dean

  

That's because there's been no change to the Bank of Canada Policy Interest Rate together with the fact that lending growth in Canada has slowed, which, in turn, means banks don't need additional funding. There's no need for them to pay more in demand deposit and GIC rates, whether in the broker (ISA) or direct (HISA) channel. Same reason why HISA ETF yields have remained relatively constant, with modest drops in most cases. sf-cool

Cheers,
Doug

February 19, 2024
6:55 pm
Doug
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zgic said
@Norman1: Do we buy the Series A or Series F funds?
What is the difference between the 2
Thanks  

If you can access Series F at your discount brokerage, buy that. The Series A may include a trailer fee that may be paid to your discount brokerage, hence why the effective yield you receive will be lower (usually 0.15-0.25%) on Series A than Series F. If a trailing commission is paid, you'll see it on an annual fee statement your brokerage has to provide you in January of every year (for the preceding calendar year). 🙂

February 20, 2024
7:26 am
Norman1
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Scotia iTRADE still offers the series F versions of the related Scotiabank brokerage ISA's. So, I buy one of the series F ones there.

BMO InvestorLine does not. So, I buy one of the series A versions of the BMO ISA's there.

March 4, 2024
10:17 am
canuckles
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Do we receive T slips for the interest earned on ISA's? I'm not sure how I'm going to calculate my interest income for my tax returns because I have lots of in/out transfers and reinvest the income.

Sorry if this question was asked elsewhere..

March 4, 2024
10:26 am
savemoresaveoften
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Doug said

If you can access Series F at your discount brokerage, buy that. The Series A may include a trailer fee that may be paid to your discount brokerage, hence why the effective yield you receive will be lower (usually 0.15-0.25%) on Series A than Series F. If a trailing commission is paid, you'll see it on an annual fee statement your brokerage has to provide you in January of every year (for the preceding calendar year). 🙂  

Scotia itrade may be the only one that allows purchase of F by non advisors.

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