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moneysense.ca, 28/06/06
Excellent Reader Comments
In response to yesterday’s post, reader JB left the following comment:
I’ve placed some cash into several GICs (30 day cashable) at 3.95%. As interest rates increase I’ll roll it over into a higher paying GIC. I’ve gone from 3.5 to 3.75 to 3.95 in the last 3 months. I thought this seemed like a good idea. Is there any advantage to have the money in a high-interest savings account instead?
JB also further explanied that he invests through BMO InvestorLine and got the idea from this post on Larry MacDonald’s blog. Thanks for the excellent tip, JB!
As an aside, ActionDirect probably has to be the worst among the big five bank’s discount brokers. I’ve been mildly annoyed before that they offer absolutely no stock or research reports. While researching this post, I found that the website provides absolutely no information such as whether a GIC is cashable. If I have to call them to find out basic information like this wasting my time and theirs, what is the point of a discount brokerage? You would think that some rinky-dink outfit, not the biggest bank in this country, runs ActionDirect.
Update: Check out the excellent comments to yesterday’s post. The consensus is that a cashable GIC beats the Altamira CashPerformer as there are no redemption charges.
moneysense.ca, 28/06/06
Thanks for the link. TD Waterhouse claims to offer 30-day GICs although maybe what they mean are those that are cashable after 30 days (their top rate curently is 4% with no fees). Anyway, a fine point to add is that a ‘laddered’ 30-day GIC approach would be better than a money market fund as it yields more and has comparable liquidity (one 30-day GIC not as liquid). CIBC Investor Edge’s redemtion fee is $25 on Altamira money market fund. Finally, according to the Globe and Mail’s annual survey of online brokers the RBC Direct is one of the worse. Best has been BMO Investor line for years.
30-day GICs sound like a great idea, but I’m not
sure how they work. Can I buy them thru my
TD Waterhouse account? Won’t I get charged a
commission of $29.95 to buy and sell the 30-day GIC?
Kanwal: Check Larry’s comments. There is no charge to buy or redeem GICs through TD Waterhouse.
BMO Investorline gives you the Top 1 to 5 year GIC rates and gives you the details whether its cashable after 30 days. As of today the best (cashable after 30 days) GIC offered is at 4.0% from “EQUITABLE TST”, “MONTREAL TST CDA” and “TD MTG CORP”.
BMO Investorline is simple to use – easy to set up – online or at a BMO branch – after it’s set up you are on your own. They don’t hand hold. You are better off going through BMO Investorline that through BMO itself since the best cashable GIC they offer is at 3.5% called the Rateriser Plus I believe.
As for the comment in the original post “Is there any advantage to have the money in a high-interest savings account instead?” I would say it comes down to liquidity. You could convert your money into cash immediately in a high – interest savings – but usually one knows if one will need the money within 30 days and can plan around this so I would say there is no advantage to high-interest savings.
Something to consider if your going to purchase GICs. Buy several GICs vs. one large GIC. (ie buy 5 $10,000 GICs vs 1 $50,000 GIC) This way you won’t have to cash out the $50K block of money if you only need access to a portion of it.
ScotiaMcLeod Direct Investing does not charge redemption fees on Altamira funds. So you can use the Altamira High Cashperformer there very nicely.
For TDW users, I believe that Manulife offers something similar and there are no redemption charges for that particular high interest savings account.
Action Direct does not charge any fees for buying/selling Altamira High Cashperformer (AIS 100)
Which RBC Action Direct GIC’s are cashable? Do I actually have to call them to find out?
CoMBo: True, but I don’t know if there are any early redemption charges.
Joe: Looks like we’ll have to call them to find out which GICs are cashable.
Can someone enlighten me please? I don’t see TD offering 30 day GIC @ 4%. In fact the TD 30 day term GIC is @ 2.25%
http://www.tdcanadatrust.com/GICs/GICTable.jsp
Ken: It would be a GIC offered through the TD Waterhouse brokerage. It may not even be a GIC from TD Bank.
The TD MTG CORP comment I made above can be found here –> http://www.bmoinvestorline –> click on Rates –> GIC Rates –> TD MTG CORP. (Cashable after 30 days) 4.00%
Hope that helps
To follow up with the AIS100 there is no redemption fees with Action Direct
Check out the new PC Financial Interst Plus Savings account. It’s now offering 4%.
http://www.banking.pcfinancial.ca/a/products/savingsPlusAccount.page?refId=sidenav
One small tip… If you are considering signing on with BMO Investorline there is a tiered research structure.
I can’t remember at which dollar level you have access to it but you can always ask and say you plan to fund the account at that level… worth a try, right?
BMO Nesbitt Burns is widely known as having the best research of the big brokers so it makes sense that their discount brokerage would as well. The basic research is still much better than other firms I’ve tried.
Vancity GICs (a west coast credit union) have pretty good rates and are backed by the provincial government so no worries about CDIC. ….
I’m out like the west coast gang war…..
WCFP