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Brokerage investment savings accounts
April 7, 2024
10:33 am
AltaRed
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Lodown said

When rates are falling - like now, MMFs can be found that always outperform HISAs. The reason being MMFs invest in short term deposits with 3-12 month future end dates while HISAs react to daily interest rate changes.  

It is not necessarily true that HISAs and ISAs react to daily interest changes. These are deposit rates set by the deposit institution. They may, or may not, react quickly to a BoC interest rate change, but generally do within 5-15 days. ISA rates, with a few exceptions, have not changed since ~August last year.

I do agree though that in a falling interest rate regime, MMF rates will almost certainly lag drops in ISA and/or HISA rates. Whether it is material or not, I doubt it because MMFs don't hold very much beyond 30-90 day paper because of exposure should they get it wrong.

April 7, 2024
11:43 am
Frieda
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Rail Baron said
I'm taking the plunge and selling DYN6005 units to purchase ATL5075 units. I'm buying series F through QTrade, and even if the bonus interest isn't applied, the regular interest rates are identical at present. And if I get the bonus interest for a couple of months, so much the better!  

I looked for Renaissance on qtrade, but didn't see any.

April 7, 2024
1:42 pm
zgic
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hwyc said
Hm. Looks like the Renaissance fund code changed recently. It was ATL5000 in #530 dated Jan 11, 2024. Then it is ATL5070 in #553 dated Feb 17, 2024 & thereafter.

Now this ... I see a promotional rate of 0.45% on eligible new deposit, effective February 12, 2024, on their product page. Wonder anyone benefited already? Too bad TDDI only offer TD HISA sf-frown  

I bought the ATL5075 USD and have got the pleasant surprise of a bonus. I didn't even know about it. Norman1 clarified it for me.

April 8, 2024
7:48 am
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savemoresaveoften said

yes can confirm the bonus for ATL5070 is real, and shows up as separate transaction when they pay out, only good till sometime in Jun tho, mark your calendar.  

Through what brokerage, CIBC-IE?

April 8, 2024
7:53 am
MyUsername
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AltaRed said
I am not sure what you mean by 'switch'. You have to first sell DYN6000 and then buy ATL5070. The orders should be able to be placed on a weekend though they will not be 'confirmed' until COB on Monday, and both will settle by COB Tuesday.  

For mutual funds, "switch" is an action that's available in addition to buy / sell. It allows to switch from one mutual fund to another through a single trade request, rather than two: sell + buy orders (though the result is the same, i.e. source fund is sold, than target fund is bought w/o the wait to settle the sale).

April 8, 2024
7:58 am
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savemoresaveoften said

if its a registered account, u need to sell the DYN first before u can place the order for the ATL (assume u dont have cash sitting in the account to cover the ATL purchase).  

I tried for both non-reg and reg accounts - same error.

Apparently CIBC-IE only allow the "switch" action between funds that are in the same load class. DYN6000 is a no-load fund, while ATL5070 is a front-end one.

April 8, 2024
10:35 am
AltaRed
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MyUsername said

I tried for both non-reg and reg accounts - same error.

Apparently CIBC-IE only allow the "switch" action between funds that are in the same load class. DYN6000 is a no-load fund, while ATL5070 is a front-end one.  

These are not mutual funds. They are deposit accounts that use the mutual fund FundSERV system to enable the transactions. Even if they were mutual funds, they are also not in the same fund family (if that matters).

I can't imagine any brokerage allowing the use of 'switch' in ISAs.

April 8, 2024
12:26 pm
PassiveandWary
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AltaRed said

These are not mutual funds. They are deposit accounts that use the mutual fund FundSERV system to enable the transactions. Even if they were mutual funds, they are also not in the same fund family (if that matters).

I can't imagine any brokerage allowing the use of 'switch' in ISAs.  

TDDI allows you to initiate a switch order if it's between two of their in-house ISAs. It's mostly for reallocating amounts to stay within CDIC limits. Not sure if it works for ISAs from different providers.

April 8, 2024
12:45 pm
AltaRed
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PassiveandWary said

TDDI allows you to initiate a switch order if it's between two of their in-house ISAs. It's mostly for reallocating amounts to stay within CDIC limits. Not sure if it works for ISAs from different providers.  

Okay..sure. That is what I meant 'in the same family', i.e. the range of TDBxxxx ISAs. I probably could have said that better.

April 10, 2024
2:11 am
pablito
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I have an account with Questrade and want to split amongst 4 ISAs to remain fully CDIC insured. NBC200 (National Bank) and NBC8200 (Natcan Trust) are each individually insured to 100K$, right? The CDIC members list search doesn't explicitly call this out like they do for other similar arrangements. Yes, I'm being paranoid. sf-embarassed

April 10, 2024
2:29 am
pablito
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I just learned of the General Bank of Canada ISA in another thread (GBH100 Class A @ 4.75%; GBH200 Class F @ 5.00%). Any reason they are not included in the list?

April 10, 2024
3:52 am
zgic
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pablito said
I have an account with Questrade and want to split amongst 4 ISAs to remain fully CDIC insured. NBC200 (National Bank) and NBC8200 (Natcan Trust) are each individually insured to 100K$, right? The CDIC members list search doesn't explicitly call this out like they do for other similar arrangements. Yes, I'm being paranoid. sf-embarassed  

I am with Questrade and didn't bother about CDIC. Just put everything in CIBC REN. I guess we should be bothered more about the brokerage than the big banks. What you'll think?

April 10, 2024
10:31 am
AltaRed
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CDIC limits are easily dealt with by spreading ISAs around but I wouldn't think twice about having 7 figures in ISAs with one of the big 5 banks like CIBC, RY, etc. It is a red herring.

Brokerages have $1M of CIPF protection against brokerage bankruptcy, fraud and other such risks that could result in loss of client assets. Again, I would not worry about $1M CIPF limits with any of the big bank brokerages. They have far too much to lose reputationally to let their brokerage divisions go rogue/bankrupt, etc..... BUT I would never have more than $1M in an independent like Questrade that does not have reputational pressures. The principals of such private ventures just move on to their next adventure.

April 10, 2024
10:39 am
mordko
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That's fear-mongering. Questrade was established in 99 and is a solid business. Suggesting that it's an “adventure” is a really, really poor choice of words without any basis.

Brokerages rarely fail, when they do someone else would likely buy the company for its assets and the insurance is there largely to deal with the cost of bankruptcy which is likely to be small.

Armageddons can of course happen, but it's an unlikely scenario to put it mildly.

April 10, 2024
12:39 pm
zgic
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I have been with Questrade for quite some time. Very sound business and very strong products. Actually the big banks should fear Questrade.
My question was not fearing about Questrade, I wanted to know when we buy ISA from a third party like CIBC-ATL on Questrade, is it covered by CIBC or Questrade. Will it come under the $1M CIPF limit of the Brokerage?

April 10, 2024
1:29 pm
AltaRed
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The value of the asset itself (the ISA) is CDIC insured by CIBC in the event CIBC goes insolvent. Whether the asset is stolen or otherwise sucked up in part or in whole as part of a bankruptcy by the brokerage is covered (with all other assets like stocks in the account) by CIPF insurance.

As for my comments on Questrade, it does not matter how innovative or how 'good' it is as a brokerage (or as Questwealth). That is not the point at all. I am pleased that Questrade is an innovator and competition to the big bank brokerages.

The point is Questrade is an independent not backed by the resources and reputational risk of a big bank. I would never have more than $1M of assets in the black box* that is Questrade or any other independent.

* Not publicly traded nor public financial statements.

April 10, 2024
2:28 pm
savemoresaveoften
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Not saying Questrade is not well run or not solid, but I dont have the behind the scene knowledge to say so and vouch for them like some here. An FI always look healthy until it isnt. And 1 week is all it takes for one to fold. History shows lots of example, may be not in Canada. But then assume Canada FIs are safer is also based on some non-proprietory info. You simple dont know what you dont know.

April 10, 2024
3:01 pm
Frieda
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mordko said
Armageddons can of course happen, but it's an unlikely scenario to put it mildly.  

Have you ever read The Great Taking, by David Rogers Webb?

I haven't finished myself, but did make efforts to understand how Canada implemented Article 8. Will put it on my book reader, and finish it.

fwiw, I do recommend the book. I've even likely posted it here already.

April 10, 2024
3:02 pm
zgic
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AltaRed said
The value of the asset itself (the ISA) is CDIC insured by CIBC in the event CIBC goes insolvent. Whether the asset is stolen or otherwise sucked up in part or in whole as part of a bankruptcy by the brokerage is covered (with all other assets like stocks in the account) by CIPF insurance.
  

Thanks AltaRed. Very Helpful.
So in case the brokerage becomes insolvent what happens to the ISAs with CIBC? Assume the assets are under $1M at the brokerage.
This is Questrade's statement on their website for Investor Protection(besides being a CIPF member):
"We go above and beyond to protect your account with an additional $10 million in private insurance."

April 10, 2024
3:14 pm
AltaRed
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CIPF will pay out up to $1M in insurance for those assets that have been consumed by the bankruptcy. I don't know how CIPF values the assets for the $1M but I assume it would be at the market value on the date the brokerage is placed into insolvency. I have never dug into the details.

So in the case of an account valued at $970k at date of insolvency, and the account consists of 1000 units of ISA X and 300 shares of company A, and 500 shares of company B, CIPF would thus ensure you get 1000 units of ISA X, 300 shares of company A and 500 shares of company B back when they pay out. Note that it is the quantity of shares, not the value of the shares that is protected. Company A's shares may have fallen 50% in value or increased 50% in value between insolvency and when you get the shares back.

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