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Where do you park your CAD$?
February 5, 2024
6:03 am
Max
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In my brokerage account I had some available funds waiting to be invested, parked it by buying CASH.TO for the moment. Planning to buy some SPY in the future.

What do you do with your available funds?

The day you become free is the day you work for fun.

February 5, 2024
6:24 am
savemoresaveoften
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Max said
In my brokerage account I had some available funds waiting to be invested, parked it by buying CASH.TO for the moment. Planning to buy some SPY in the future.

What do you do with your available funds?  

cash etf, brokerage cash etfs, etc

you are already optimizing ur cash earned at the moment while waiting for stock market correction.

February 5, 2024
11:23 am
canadian.100
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savemoresaveoften said

cash etf, brokerage cash etfs, etc
you are already optimizing ur cash earned at the moment while waiting for stock market correction.  

So the DJIA is down today 236 points ie 0.61%
and the TSE is down 196 points ie 0.93%
Not sure how many points you will consider a stock market correction - as we all know one should not "time the market" whether it be stocks or GICs.

February 5, 2024
11:54 am
savemoresaveoften
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canadian.100 said

So the DJIA is down today 236 points ie 0.61%
and the TSE is down 196 points ie 0.93%
Not sure how many points you will consider a stock market correction - as we all know one should not "time the market" whether it be stocks or GICs.  

What you mentioned is just normal market fluctuation, its noise and nothing else.
If you ask me, I am not putting new money into the stock market at current level. Its whatever one's investment style and risk taking capability that dictates when and how much to invest. "Should not time the market" is a very useless 'useful saying', that seem to make a lot of sense, when it really isnt. There are only 2 time-tested rules for successful invesment in my mind:
1) Buy when it looks like the end is coming and even the diamond hands are getting shaky
2) If the ground goes from rock solid to appear to be shaky, be the first one to sell if one wants to sell, dont wait and be the last (This ties in with point#1 btw)

February 5, 2024
1:02 pm
mordko
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^Opinion, expressed as fact.

Given that markets trend up, there is a decent chance that stocks are as cheap as they are going to get. You could be waiting for a long time before it starts looking like the “end is coming” and when that happens you could be paying more for your equity. And during the bear market you are very unlikely to pick the bottom, which makes it even more likely that you’ll lose out by trying to time.

“Should not time the market” isn’t useless. I think one should have an asset allocation strategy and stick to it regardless of the market. That said, today I am buying FI because it’s underweight.

To OP’s question, my FI is split between Canadian and US bonds ETFs, HISA and GICs. Use bonds in brokerage accounts, eg ZAG.

February 5, 2024
5:35 pm
Loonie
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Suggest OP look at the ISAs at his brokerage , under "mutual funds".

I agree with savemoresaveoften.
.

February 17, 2024
6:41 pm
Max
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Do you have any preferences in the different ETF options?

NSAV.NE: Ninepoint High Interest Savings Fund
PSA.TO: Purpose High Interest Savings Fund
HSAV.TO: Horizons Cash Maximizer ETF
CASH.TO: Horizons High Interest Savings ETF
CSAV.TO: CI High Interest Savings ETF
HISA.NE: High Interest Savings Account Fund

The day you become free is the day you work for fun.

February 18, 2024
2:17 pm
Doug
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Max said
Do you have any preferences in the different ETF options?

NSAV.NE: Ninepoint High Interest Savings Fund
PSA.TO: Purpose High Interest Savings Fund
HSAV.TO: Horizons Cash Maximizer ETF
CASH.TO: Horizons High Interest Savings ETF
CSAV.TO: CI High Interest Savings ETF
HISA.NE: High Interest Savings Account Fund  

While I prefer ISAs, some discount brokerages do not offer ISAs, or have a very limited selection of ISAs.

Are you with Wealthsimple, Max? If so, you can use their built-in Wealthsimple Cash account, which includes a linked prepaid credit card, that pays between 4-5% per annum, currently, and is CDIC insured as the funds are custodied with Canadian Western Trust Company and held in either a Canadian Western Trust or Canadian Western Bank deposit account.

If either of those are not options, the HISA ETF I would tend to prefer is HISA (which I guess is HISA.NE, assuming .NE means NEO Exchange). It's a product from Evolve ETFs and currently has ~$5 billion in assets under management.

https://evolveetfs.com/product/hisa/

Of course, only the first $100,000 of that ~$5 billion would be CDIC insured. CIBC Mellon Trust Company is the custodian and trustee of the assets; CIBC Mellon Global Security Services Company is the fund administrator; and TSX Trust Company is the fund registrar and transfer agent, which maintains the daily record of the fund's unitholders and units held by each. In short, your funds would be in good hands there. sf-cool

A word on sales: some people try and 'time' when to sell the fund, taking in the expected premium to NAV relative to the expected next monthly interest payment. That's not guaranteed and is really time consuming. For me, if I held these HISA ETFs, I would just treat it for what it is, interest is calculated daily but only paid monthly, so just know that to receive that month's interest payment, I should sell on the next business day following the monthly payment date.

Cheers,
Doug

February 18, 2024
5:57 pm
Max
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Doug said

While I prefer ISAs, some discount brokerages do not offer ISAs, or have a very limited selection of ISAs.

Are you with Wealthsimple, Max? If so, you can use their built-in Wealthsimple Cash account, which includes a linked prepaid credit card, that pays between 4-5% per annum, currently, and is CDIC insured as the funds are custodied with Canadian Western Trust Company and held in either a Canadian Western Trust or Canadian Western Bank deposit account.

If either of those are not options, the HISA ETF I would tend to prefer is HISA (which I guess is HISA.NE, assuming .NE means NEO Exchange). It's a product from Evolve ETFs and currently has ~$5 billion in assets under management.

https://evolveetfs.com/product/hisa/

Of course, only the first $100,000 of that ~$5 billion would be CDIC insured. CIBC Mellon Trust Company is the custodian and trustee of the assets; CIBC Mellon Global Security Services Company is the fund administrator; and TSX Trust Company is the fund registrar and transfer agent, which maintains the daily record of the fund's unitholders and units held by each. In short, your funds would be in good hands there. sf-cool

A word on sales: some people try and 'time' when to sell the fund, taking in the expected premium to NAV relative to the expected next monthly interest payment. That's not guaranteed and is really time consuming. For me, if I held these HISA ETFs, I would just treat it for what it is, interest is calculated daily but only paid monthly, so just know that to receive that month's interest payment, I should sell on the next business day following the monthly payment date.

Cheers,
Doug  

Hey thanks for the info Doug.

Already have a Wealthsimple account I just opened in Decembre to receive my free iPhone 15.

My brockerage account is for my Inc so it’s corporation money and it’s easier just to buy an ETF. Already have money in CASH.TO however the 50k of annual interest will be taxed so I was searching for a fund in which the interest is reinvested automatically. Might go with HISA.NE!

The day you become free is the day you work for fun.

February 18, 2024
7:25 pm
Bill
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Paid out or reinvested, interest income is taxed.

February 18, 2024
7:52 pm
zgic
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I am trying to understand what are the benefits of holding these HISA ETFs than plain GICs?
I am new to this and wanted to understand why one should buy these HISA ETFs

Thanks

February 18, 2024
8:06 pm
AltaRed
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zgic said
I am trying to understand what are the benefits of holding these HISA ETFs than plain GICs?
I am new to this and wanted to understand why one should buy these HISA ETFs

Thanks  

Liquidity They are almost as good as cash. Available T+1 (2 days). Just like brokerage ISAs and MMFs. However, yield is not guaranteed, All of these will drop in yield as soon as BoC drops interest rates.

February 18, 2024
8:14 pm
zgic
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AltaRed said

Liquidity They are almost as good as cash. Available T+1 (2 days). Just like brokerage ISAs and MMFs. However, yield is not guaranteed, All of these will drop in yield as soon as BoC drops interest rates.  

Thanks AltaRed. But an ETF like CASH does not have CDIC coverage too. Any of these have CDIC coverage?
The rate is also not guaranteed.
So besides Liquidity there is NO other advantage.
If one gets a high HISA in an account itself no need to buy an ETF correct?

February 18, 2024
8:26 pm
AltaRed
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Trusts such as ETFs and MMFs do not have CDIC coverage but generally hold investment grade assets essentially negating the need for deposit insurance. Brokerage ISAs are deposit accounts and have CDIC coverage to $100k.

The difference between them and HISA bank/CU accounts is yield. The former tend to follow BoC interest rates and thus are currently outperforming HISAs, but will no doubt underperform HISA accounts when/if BoC significantly drop interest rates.

HISAs compete in a somewhat different (retail banking customers primarily) market for the most part. Interest rates are set to attract the deposits they need, or do not need, as the case may be with their banking competition. Yield differences can be significant so it depends on what a retail investor is prepared to do to obtain a particular yield.

February 18, 2024
8:48 pm
mordko
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zgic said

Thanks AltaRed. But an ETF like CASH does not have CDIC coverage too. Any of these have CDIC coverage?
The rate is also not guaranteed.
So besides Liquidity there is NO other advantage.
If one gets a high HISA in an account itself no need to buy an ETF correct?  

You should really be comparing to a high interest savings account rather than GIC to make sure its apples to apples.

In your case, if you can find a standard HISA account which pays a comparable or better rate, HISA ETFs may have no advantages at all. But let's say it's cash held in a corporate account. Corporate savings accounts pay… Let's say 2.5% interest. That makes HISA a lot more attractive. There are other circumstances when HISA ETFs become attractive; it's case by case.

February 19, 2024
11:58 am
zgic
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mordko said

You should really be comparing to a high interest savings account rather than GIC to make sure its apples to apples.

In your case, if you can find a standard HISA account which pays a comparable or better rate, HISA ETFs may have no advantages at all. But lets say its cash held in a corporate account. Corporate savings accounts pay… Lets say 2.5% interest. That makes HISA a lot more attractive. There are other circumstances when HISA ETFs become attractive; its case by case.  

Thanks mordko.
The HISA account is covered by CDIC like Tangerine and currently it is paying me 6% till Feb end.
But the HISA ETF CASH is NOT covered by CDIC correct? So is the risk high on this without the CDIC coverage?
Also current 12-month trailing yield is 5.08% minus MER 0.11% so Net Yield = 4.97%

February 19, 2024
2:22 pm
Doug
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AltaRed said
Trusts such as ETFs and MMFs do not have CDIC coverage but generally hold investment grade assets essentially negating the need for deposit insurance.

They do have CDIC insurance; the HISA ETF or money market mutual fund is a unique depositor, just as an commercial depositor, it's just limited to $100,000. When they hold $5 billion in assets, $100,000 is, practically speaking, little more than a rounding error. sf-cool

The difference between them and HISA bank/CU accounts is yield. The former tend to follow BoC interest rates and thus are currently outperforming HISAs, but will no doubt underperform HISA accounts when/if BoC significantly drop interest rates.

I would disagree with you a bit here. Why would HISA ETFs underperform ISAs in terms of rates when the BoC is cutting rates? Also, as we saw in the past when the banks dropped their HISA deposit rates with the BoC's rate cuts, they cut at twice (or even three times) the rate of the BoC's rates. The point is that HISA ETFs and ISAs both follow closely the BoC's rates, even if it may be more indirectly; they both more closely follow the bond markets.

HISAs compete in a somewhat different (retail banking customers primarily) market for the most part. Interest rates are set to attract the deposits they need, or do not need, as the case may be with their banking competition. Yield differences can be significant so it depends on what a retail investor is prepared to do to obtain a particular yield.  

Not necessarily actually! HISA ETFs and ISAs/direct HISAs are just different funding channels. Banks can raise deposits much more quickly through the wholesale deposit channel (HISA ETFs) versus the retail broker deposit (ISAs) and retail branch-raised deposit channels (direct HISAs).

Generally, I prefer ISAs because of the CDIC insurance, but mainly because of the flexibility in terms of being able to sell any time instead of only just after the monthly payment date; however, some brokerages have limited or no access to ISAs, so HISA ETFs/MMFs are the only option.

Cheers,
Doug

February 19, 2024
2:27 pm
Doug
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zgic said

Thanks mordko.
The HISA account is covered by CDIC like Tangerine and currently it is paying me 6% till Feb end.
But the HISA ETF CASH is NOT covered by CDIC correct? So is the risk high on this without the CDIC coverage?
Also current 12-month trailing yield is 5.08% minus MER 0.11% so Net Yield = 4.97%  

The first $100,000 of a HISA ETF's AUM is CDIC insured, but that's yet. Correct.

Yes, as AltaRed corrected me in another post, the MER, though paid annually, is deducted monthly, out of fairness to all unitholders (short- and long-term). So your yield calculation sounds accurate.

The risk is not necessarily high, though. What is the likelihood the underlying asset, a Canadian Big Six bank, becomes insolvent?

That being said, an investment manager can always propose to change the investment mandate of a HISA ETF to hold other assets, but such a change requires unitholder approval, so you would have at least two to three months notice of such a proposed change. They're doing that a bit now, but mainly just to add investment grade Government of Canada treasury bills and certain money market instruments, like the Ontario Teachers Finance Trust commercial paper, things like that.

Cheers,
Doug

February 19, 2024
2:32 pm
Doug
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AltaRed said

Liquidity They are almost as good as cash. Available T+1 (2 days). Just like brokerage ISAs and MMFs. However, yield is not guaranteed, All of these will drop in yield as soon as BoC drops interest rates.  

Not quite as liquid; when you sell a HISA ETF, your trading balance is updated instantaneously in Scotia iTRADE (and similar brokerages), whereas selling an ISA won't update your trading balance until the settlement date (or, at the very least, the next business day).

Don't get me wrong, I prefer ISAs, but if someone is, say, with Wealthsimple Trade, or a Big Five bank brokerage house that has much fewer ISA options, or they require intraday trading liquidity, then a HISA ETF may be the better option.

Also, ISA yields will drop when the BoC cuts rates. The difference with HISA ETFs and ISAs is your accrued interest for the current month is already "in the bank," so to speak, and will be paid, whereas there is no such thing as current month accrued interest in a HISA ETF (the rate to be paid is determined each month).

Cheers,
Doug

February 19, 2024
2:47 pm
zgic
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Doug said

The first $100,000 of a HISA ETF's AUM is CDIC insured, but that's yet. Correct.

Cheers,
Doug  

Thanks Doug.
Sorry, little confused, are you saying that the HISA ETFs are covered by CDIC for 100,000 in your statement above?
Looking for that here
https://horizonsetfs.com/ETF/hsav/#product-facts

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