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Money Market funds or in an ISA?
January 24, 2018
3:49 pm
2017opinionsmatter
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There are many Money Market funds with every institution. E,g. Listed on RBC wealth management site http://fundinfo.rbcgam.com/mutual-funds ... default.fs

Discount brokers may not issue or manage their own MM funds, but do offer thousands of them managed by fund companies. E.g Listed on Questrade http://www.questrade.com/mutua.....funds_list

I used to only park cash in Investment Savings Accounts (ISAs) such as DYN1300 with Scotia, RBF2010 with RBC. Why?
1. It is insured up to 100,000 per account per client by CDIC(in Canada) or FDIC (In U.S)
2. Ultimate liquidity: as in, when you sell the fund the money is immediately freed to be used for trading. No waiting until next day settlement
3. A few years back (as they were especially from 2002 to 2004 and 2007 to 2009) some of the MM funds were offering 0.5% yield with a management fee of 0.4% which means your return would be negligible. MM funds performed far less than ISAs back then.

Now we are in 2018, I would like to share some of my recent observations as they start to get interesting.

In a rising interest rate environment, MM fund reacts immediately. It rises with central bank’s announcement almost simultaneously. ISA on the other hand – Not so much. It eventually does. But you never know by how much and when.

There used to be only Serie A MM funds available for individual investors to purchase. Now there are at least Series A (regular), Series E (premium usually with a minimum purchase amount 100,000), Serie D (available in self directed investment accounts) and you still have the good old Series F (only available via a financial adviser). More choices more competitive rates generally

MM fund Liquidity has improved over the years thank to the rise of Mobil banking, online investing. In my opinion it is no longer a deciding factor when comparing with ISA.

You do still have item #1 to worry though and I do not seem to have found a simple solution yet. Let’s just say that the big SIX are probably too big to fail. In an event if that was to happen, just imagine what would happen to all your stocks, bonds, ETFs, non-money market Mutual Funds. MM funds might be your least worry. CDIC may not be able to make cash available to you right away like an ISA. But you should be able to get everything back after CDIC sells the institution and its assets in a matter of when and how. Bottom line is – Cash is Cash

Please vote here

January 24, 2018
9:10 pm
Wayno
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Money Market (MM) funds are normally used to "Park " money for a very short term from a brokerage account since they offer Very low rates of interest.

Select HISA have more competitive rates and are a much better choice !

If you have a financial advisor parking money in MM funds for long periods,
you need to find a new advisor.

January 25, 2018
7:41 am
2017opinionsmatter
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I do agree that for the last 10 years indeed MM has been much worse than ISA.
Only recently some MM started to increase yield aggressively. Especially some US dollar ones. e.g CIB483 and RBF1003 are yielding above 1.5%. I do not know any ISA currently yield above 1.1%. Even CAD ones, you can find some with Manulife or MACKENZIE above 1.15%. Did I miss something?

January 25, 2018
10:13 am
Bill
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Wayno's point is why would you leave loose cash with the discount brokers who can't match the rates offered by most of the institutions highlighted on this site? Just transfer any money you want to park temporarily from your broker to one of the online banks offering more, why bother fiddling with the broker's MM funds or ISA's when their rates are always inferior to those featured here?

January 25, 2018
1:00 pm
2017opinionsmatter
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True - they should both be used as a temp solution until
1. You are ready to trade actively or
2. You ran out of good saving accounts such as EQ 2.3%, Alterna 2.05% and WeathOne 2%

In realty though it is more complicated than that because:
1. I believe that most us would not hold more than 100K with any of those banks
2. It is hard to know when you are ready to trade. I personally went through both 2000 and 2008 market melt down. This unreal bubble makes one think that it is only when not if.
3. If one has dealt with both the wealth management and self directed systems, you tend to notice that not all MM and ISA are offered equally.
E.g HOM100 is very easy to buy in Questtrade. Not so much in RBC Direct Investing
RBF2010 is very easy to buy in RBC Direct Investing but not so much with RBC wealth management.

Btw, just noticed today that HOM100 is at 1.15%. This one might actually be the highest ISA out there.
http://www.hometrust-hisa.com/

Happy investing and saving everyone

January 25, 2018
4:13 pm
Wayno
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If you still want another opinion on MM Funds ....

Still in money market funds? Here’s a better way to park your cash!
Rob Carrick ... Published June 6, 2014.....Updated March 25, 2017

"Money market funds are the billion-dollar blunder that investors and advisers keep making despite the availability of a clearly superior alternative.
<a href="http://">www.theglobeandmail.com/globe-investor/investment-ideas/still-in-money-market-funds-heres-a-better-way-to-park-your-cash/article19058090/

January 26, 2018
5:37 pm
Scruge
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2017opinionsmatter I didn't know ISAs were available inside trading accounts. I have cash awaiting investment in my RRSP trading account so I switched it from RBF1002 Money Market to RBF2010 ISA and now it makes 0.25% more 🙂
I have read and recommended this site for years but today I joined to thank you.

January 27, 2018
2:15 pm
2017opinionsmatter
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You're so welcome Scruge.
It's my life long pursuit to learn and to collaborate.
There's so much info nowadays for better and for worse...
It takes a group effort to make the most

January 30, 2018
10:04 am
Londonguy
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Anybody succeed in doing this with the TD ISA in a TD self-directed RSP?

I think the code is TDB8150? My order entry won't accept that code

I know I could call them but that means a 45-60 minute wait (or more) on the phone that I'd prefer to avoid if someone already knows the answer

January 30, 2018
10:39 am
Bill
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Have you tried TDB8151?

January 30, 2018
11:04 am
Londonguy
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I just keyed that one in and it appears to work, TY -- that'll be a definite improvement over the TDB165 Premium MMF that I've been using

I love you guys!!! LOL

January 30, 2018
2:25 pm
Londonguy
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FYI I did some more digging and found more TD options/codes for loose RSP cash --

https://www.tdassetmanagement.com/solutions/additional-solutions/td-investment-savings-account/index.jsp

I'm planning on moving into TDB8155 tomorrow after my MMF sales settle -- wish I'd known about this stuff sooner, but better late than never I suppose

January 30, 2018
3:25 pm
semi-retired
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Londonguy said
FYI I did some more digging and found more TD options/codes for loose RSP cash --

https://www.tdassetmanagement.com/solutions/additional-solutions/td-investment-savings-account/index.jsp

I'm planning on moving into TDB8155 tomorrow after my MMF sales settle -- wish I'd known about this stuff sooner, but better late than never I suppose  

I looked at this site.The top accounts pay 1.10 & the bottom F series pays 1.35.What does F series stand for & why would anyone not use them instead of the top regular 1.10 rate???The daily interest & monthly payout on both appear to be same.

January 30, 2018
3:57 pm
Marnie
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semi-retired said

I looked at this site.The top accounts pay 1.10 & the bottom F series pays 1.35.What does F series stand for & why would anyone not use them instead of the top regular 1.10 rate???The daily interest & monthly payout on both appear to be same.  

F series pay higher interest because it's only available from a financial advisor who would then charge you a fee for services rendered

January 30, 2018
4:14 pm
Loonie
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A friend of mine had similar question. Was earning essentially nothing at TDDI.
I think it was Bill who then recommended TDB8151, and also TDB8155 issued by TD Mortgage Corp (separately insured). They both pay the same.
My friend did this several months ago and has been happy with the result.

January 31, 2018
7:35 am
Norman1
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semi-retired said

I looked at this site.The top accounts pay 1.10 & the bottom F series pays 1.35.What does F series stand for & why would anyone not use them instead of the top regular 1.10 rate???The daily interest & monthly payout on both appear to be same.  

The F series is for fee-based accounts. No trailer fee is paid to the seller by TD Asset Management. Instead, the amount of the trailer fee is added to the return and the purchaser comes to a separate agreement to compensate the seller.

¼% per annum is the customary commission for deposit brokerage. That's why the return on the F series (with no trailer commission) is ¼% per annum more.

ScotiaBank ISA info table shows these details for their ISA offerings.

January 31, 2018
9:44 am
Londonguy
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Just to confirm the foregoing commentary, when I attempted to buy the TD Bank F series ISA symbol TDB8151 this morning in my self-directed TD RSPs, the orders were rejected because I don't have (nor do I want) an advisor

However, as a self-directed account I was able to access the regular TD ISA symbol TDB8150, so it's the same net return to me, i.e. currently 1.10%, which is almost a full half point better than I was getting before in their MMF

January 31, 2018
11:05 am
Bill
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Londonguy, yesterday you said it wouldn't take 8150 - but today it did? And you said 8151 appeared to work - but it ended up not working? In any event, the Cdn dollar ISA's available to TDDI clients appear to be TDB8150, 8155 & 8159.

January 31, 2018
11:34 am
Londonguy
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Yes, I did say that, based upon the order entry system letting me at least enter the symbol yesterday when I tried to pull it up, but that was only a limited test, i.e. no $

When I tried to actually place orders today for 8151, I could enter the symbol but it wouldn't let me past that field (it kept prompting me to enter a valid symbol) -- so on spec I tried 8150 to see what would happen and the first order sailed right through, then I did 3 more in different accounts -- they're now all sitting in my order status file as open for settlement tomorrow -- AFAIK I'm good to go because if the orders were going to be rejected for some reason I would have seen evidence of it by now

January 31, 2018
12:09 pm
Marnie
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Bill said
Have you tried TDB8151?  

You can't buy TDB8151 unless you use a financial advisor

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