This article has 35 comments

  1. My TFSA is with RBC Direct Investing; I used it to buy units of an income trust, in order to shelter the distributions from tax.

    If I was looking for a straight savings-account type investment, ING would have been my choice for a TFSA.

  2. Awesome post, I wrote a review about ING Direct today. Seems that they have a very competitive offering for a regular “savings” TFSA.

  3. Hi Everyone.
    Do not hesitate to use Outlook Financial. They have been my main savings vehicle for 6 years and it has been great.
    Deposits are guaranteed up to $1M using the same method all Credit Unions use. If there is a ‘bump’, it is that you can not move funds electronically. For me this was perfect (a little harder to get at my ‘savings’).
    Great firm to deal with!!

  4. Agreed Ron, I’ve used Outlook for the past 5 years.

  5. I have an ING direct account and I’m happy with the choice. One thing I did not realize is that the deposits aren’t really flexible. I had been saving for a car and put $5000 into a TFSA on Jan. 1 of this year. I finally found a car and moved out all of my money so I could write a certified cheque. At the last moment, the seller back out of the deal and I tried to put my money back into the TFSA. Unfortunately you really are limited to a $5000 deposit a year. I’m told I’ll be able to put $10,000 in come January.

  6. @ Al, I have had the same issue and it has annoyed me a bit, as I thought I could use my TFSA to act as a sort of emergency/vacation fund. Well, it is vacation time now and I have taken a few weeks here and there and have withdrawn money as necessary. Now that I want to save for whatever comes next, I find that I cannot put much more money in the account. Instead, I have opened a regular account with ING. Still happy.

    Has anyone else noticed this with other banks and credit unions?

  7. Canadian Capitalist

    @Ron, @FinanceMatters: I have no doubt that Outlook Financial is an excellent institution but the lack of a CDIC guarantee is a slight negative for me.

    @Al, @Matt: Yes, the withdrawal rule is set by the Finance Department. I wrote about it here (See question # 3):

    I’m planning to keep funds I won’t be tapping into often in a TFSA, which is why I’m also looking for cashable GICs instead of just high interest savings. It does seem to me that the withdrawal rule isn’t widely known.

  8. CC, I was thinking about moving my TFSA from PC Financial to TD Waterhouse. What are your thoughts about putting the TFSA in to a bond ETF? Obviously there would be the commissions which would have to be factored in. I found out that you only get one free withdrawal per year and subsequent ones are $25 each. Obviously, if you needed the money you should withdraw more than required. Should this option only be used for non-emergency funds that I am planning on holding for the long term?

  9. We are holding our funds at BNS, but after reading on MDJ’s review of ING I am considering moving things over to ING….the main reason I like holding it at BNS is accessibility since we hold 90% of our banking with them

  10. Much appreciated CC….that clears things up, and I am glad that my boneheadedness did not cost me for next year.

  11. I also have a TFSA at ING and it works well. If you are looking for a slightly higher interest rate than ING you could try Pacific & Western Bank of Canada

    Their savings account rates are slightly higher than ING and TFSA eligible. They just don’t have a web interface like ING so it requires a phone call to move your money around.

  12. Al (different Al)

    With the pitiful rates everyone is offering, why even bother? Just dump the money in the savings account and wait for better waters.

    $5000 * .01 = $50 * .4 = $20 tax savings if invested at the beginning of the year.

    I’m waiting until next year and hopefully I’ll be able to buy $10K worth of preferred shares or something like that in a TFSA discount brokerage.

  13. I looked at ING and ICICI Bank for my TFSA savings account. I have regular savings accounts at both banks, hence was able to compare them in more detail (incl their web interface).

    Generally, ICICI provides a slightly better interest on deposits and GIC’s than ING. They have a fairly OK web interface (definitely lacking when compared to ING). In addition, ICICI restricts all TFSA-related activities to a branch – nothing can be done online for a TFSA account – not sure why (no one at a branch was able to explain the reasoning behind this to me).

    The ING 3% rate for TFSA savings appears to be a promotional rate to encourage new investment. If you look at the historical rates ( , the 3% rate started on Jan 1, prior to that it was 1.35%.

    Below is a comparison of historical rates between the two banks:

    Jan 31 3% 3%
    Feb 28 2.3% 3%
    Mar 31 1.85% 2.5%
    Apr 30 1.50% 2%
    May 31 1.35% 2%
    June 30 1.35% 2%
    July 31 3% 1.75%

    All things considered, I had to weigh between a slightly higher interest rate (ICICI) vs. the convenience of managing everything online (ING). The higher interest rate won in the end.

    Note: I have no affiliation with either bank, just a customer.

  14. Apologies for the error in the above note, ING’s 3% rate started on July 1, not Jan 1.

  15. CC,
    i’m sure you’ve thought of this, but why don’t you use bond ETFs for emergency funds? The yields are better and the volatility relatively low.

  16. Sorta off-topic, and a continuation of my post in the Forum, but…

    CC, what vehicle do you use for your cash allocation in your portfolio? I recall a post on MMFs? I can’t bear the paultry returns. I’d rather get more in a high-interest account and dinged tax on it.

    I think a GIC ladder would be a great way, just as long as enough is invested into each year term that it would become useful if needed for rebalancing when the term ends.

  17. I have used an ING Investment Savings Account since 2006, and a TFSA with them since Jan 10.

    The initial setup requires filling out the online application, then faxing it in with a void cheque from your transfer account. Once setup, transferring funds (back and forth), takes about 2 days max. You can also setup an automatic withdrawal/deposit to ING. I have been happy with the ING rates, which have been historically near the top for savings accounts.

    And yes, all TFSA accounts only let you DEPOSIT up to $5000 per year (plus any accumulated room from previous years).

  18. Canadian Capitalist

    @pessimist, @cogsy: While bonds and bond ETFs, especially the short-term ones, are low risk, they do have some risk of capital loss. Bonds lost 4% in calendar year 1994. While short bonds lost just 1% that year, the risk of a capital loss, however slight, is there. It is best to hold emergency funds in securities that no possibility of less, which would suggest a savings account or a GIC ladder.

    @RS: I’ve heard negative reports on ICICI in the press. What has been your experience so far?

    @Al: Fair enough. For now, I’m just going to keep the TFSA funds in the savings account and wait for better rates. But I’m thinking ahead because the tax savings start to become meaningful starting next year (at least $100 / year).

    @Sampson: Currently, I keep emergency funds in a RBC eSavings account. I’ve tried other places such as the E*Trade Cash Optimizer, ING Direct, PC Financial etc. but now that RBC offers a decent rate, I keep it where I can get instant access.

  19. I like Achieva Financial. Have been using their savings account for a few years and they constantly pay amongst the top rates available (currently 1.85%). As a slight perk, they even pay you $1/mo if you opt in for electronic statements. Similar to Outlook Financial they are covered by the Credit Union Deposit Guarantee Corporation. I originally opened a TFSA through ING Direct to get the promo rate but would have been better off with Achieva and their overall higher rates. My plan is to use the “December strategy” and to withdraw from ING in December so I can contribute to an Achieva TFSA in January without paying fees or penalties.

  20. I’ve set up my wife’s TFSA at ING Direct (safety first!). For mines, I have it in a Questrade trading account.

  21. There is no “one size fits all” solution to the TFSA question. For me, I also used ING, but I put my maximum contribution room into a 5-yr locked-in GIC – with the intention to continue to do so over the next 5 yrs to create a “GIC ladder”.
    For now, the total value of my TFSA account is nearly a rounding error compared to the value of my RSPs and cashable accounts, so I choose not to put too much thought into it.

  22. CC: Regarding ICICI, let me just say that I still have accounts with them cuz of their rates.

    The sign-up process for a regular savings account was a nightmare with lot of paperwork going back and forth; lot of errors with them following GIC redemption instructions, and the list goes on…

    My idea when I signed up with ICICI was to consolidate all savings from different banks in one location; however, having dealt with ING & ICICI, I definitely believe that it will more likely happen with ING rather than ICICI.

  23. If your horizon is long term, GIC’s and savings accounts are a waste of time IMO, I opened my TFSA with an online broker and doubled my $5k..all in cash now..

    If rates start to go up to a reasonable rate then I would consider GIC’s but I’ll take my chances in the market until that happens.

    Short term bond ETF’s are also an option, less risk then stocks..better return then GIC’s in the longer run.

    • Canadian Capitalist

      @boko: I disagree. Since GICs are not redeemable without an interest penalty, they tend to pay a bit more because they are illiquid. Here’s an example: 2-year Canada bonds yield 1.29%. ING Direct 2-year GICs pay 2%. 5-year bonds yield 2.53% compared to 3% for GICs.

      The money that belongs in secure investments is things like emergency funds where it doesn’t make sense to take market risk. I agree that the bulk of long-term money belongs in the stock market.

  24. I agree with Michael’s comment about Achieva. They have one of the best High Interest Savings and TFS accounts around 1.85% right now. I really enjoy the monthly $1 credit for paperless statements and the high interest of course. I’m really kicking myself for being seduced by PC’s initial interest rate on TFSA last year and not going w/ Achieva, although I knew that PC’s interest rate was always lower historically. The downsides: GICs are not cashable; no CDIC coverage, only CUDGC.

    I closed my HiSave account with ICICI: very buggy web interface and poor customer service, and now interest rates are lower than Achieva’s.

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  26. Should you treat a TFSA like a bank account? Sure you can pull the money out with no penalty but don’t you want that money working for you? TFSAs should be treated like RRSPs in my opinion; leave it in there any make some money from it. A self-directed investment account seems like the best way to go. And until the money builds up, ETFs are a good way to invest as opposed to individual companies. I have my TFSA with TD Waterhouse paying 9.99 a trade. It’s up 7% so far. Clearly it has the potential of losing money but that’s the price of risk (and reward).

    • Canadian Capitalist

      @ghentsch: I think of all accounts as one big pot. Before the advent of TFSAs, we didn’t have a choice — emergency funds had to be kept in a taxable account where interest is taxed at marginal rates. If the RRSPs were maxed out, stocks were also held in taxable accounts. With TFSA, the contribution room today is only $5,000. If you could keep part of your emergency funds OR part of your stock portfolio in a TFSA, what would you do? I would pick emergency funds because interest income is taxed at marginal rates. In a couple of years, the TFSA room would have grown enough that stocks can also be sheltered.

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  28. Dude.. Why not get some good long term dividend paying stocks?

    No capital gains, no tax on dividends. What’s not to love?!

    Keep an emergency fund somewhere else. The TFSA should be a growth fund since it is completely tax free.

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  31. I’m interested in setting up a “Smith” style deductible tfsa investment. One e.g is my tfsa signs a prom note to my wife at 10% and she does the same for me. We both take a tax deduction for interest paid and we both collect interest tax free in the TFSA accounts. Is this a viable strategy?

  32. I don’t know why everyone is saying the CUDGC (Credit Union Deposit Guarantee Corporation) coverage is a downside. I think CDIC coverage is the downside to the banks! CDIC coverage only guarantees that up to $100,000 of your savings are covered. CUDGC coverage in Manitoba guarantees credit union deposits (except mutual funds & stocks of course) without limit!! How is that a downside? Although each province’s coverage is different as the credit unions are regulated provincially not federally like the chartered banks.

  33. no more mutal funds

    i used to have most of my terms in ING. when i moved they froze my account forcing me to borrow from the credit union to complete my mortgage, then last fall they froze it again, saying i had to change my PIN, that they do this to all clients.
    so i have systematically removed about 50 thou from them. that said, i have some TFSA there.
    credit union rates are not great, but yearly you get a bonus, a share of profits and knowledge that your dollars are used locally.
    also your entire accounts can be joint, avoiding messy death and estate problems and ALL your funds are insured, not just 100 thou
    went with TD/CT for tfsa this year. Financial Plus. max return 12% Benefit from the growth potential of the Canadian financial sector through returns based on the performance of the S&P/TSX Banks Index. principal is guaranteed and no foreign currency risk.