Saving

New High-Interest Savings Account

July 9, 2005

1 comment
Altamira is providing new competition in the high-interest savings accounts area with its CashPerformer product. The interest rate offered is 2.4%, which is the same as ING Direct and AMEX Bank, but not as high as that offered by ICICI Bank (2.75%) or Achieve Financial (2.85%). Money can be transferred electronically between the chequing account and Altamira’s savings account, similar to ING Direct. It appears to me that Altamira is offering a me-too product that will probably only appeal to people who want to park their cash temporarily and later want to purchase an Altamira mutual fund.

High Interest Savings Accounts

May 11, 2005

8 comments

Since the Bank of Canada has been neutral for a while now, interest rates on personal savings accounts have barely budged. However, competition in this area is heating up and here are some of the better options:

Full Disclosure: Apart from holding a savings account, I have no financial interest in any of the companies mentioned above.

Are Emergency Funds for Everyone?

March 13, 2005

2 comments

Most financial planners advise keeping emergency funds to cover three to twelve months living expenses in a savings account or money market fund. For the vast majority of people, it is the sensible thing to do. However, like most recommendations, this one-size-fits-all approach is not suitable for everyone.

Take someone who is very disciplined with spending, has a lot of equity in their home, has a secured line of credit against the home, is paying a mortgage and also has cash parked in an emergency fund. I would argue that this is an inefficient allocation of capital. Instead, they can take most of their emergency funds and make a pre-payment on their mortgage. They start saving mortgage interest immediately, which in most cases will be much higher than the taxable interest in a savings account. In an emergency, they can withdraw necessary funds from the secured line of credit.

Of course, this approach is not for everyone and should be considered very carefully. There are risks involved: the prime rate during an emergency could be much higher than their mortgage interest. If emergencies are a high-probability event, having an emergency fund is the better alternative. Also, it is critical to be disciplined about the secured line of credit. A month’s vacation in Hawaii is not an emergency.