High Interest Savings Accounts at Discount Brokers
1. You can park cash in these accounts by pulling up a quote for the fund code and clicking on the “Buy” button.
2. Most of these funds have an initial minimum investment of $1,000. The exceptions are RBC HISAs which have a minimum investment of $500. TD HISAs have a minimum investment of $100 at TD Waterhouse even though the website says that the minimum is $1,000. Interest is accrued daily and paid monthly.
3. Typically, these accounts are sold without any loads or minimum holding periods or any fees of any kind but as noted earlier, always check first before buying.
4. If you have a large cash balance, make sure you split your savings in chunks of less than $100,000 between a number of these accounts. That way all your savings will be fully covered by Canada Deposit Insurance Corporation.
5. All these HISAs are also available as F-series funds that do not pay a 0.25% trailer commission. However, F-Series funds are only available through financial advisors. Even if you are able to pull up a quote and place an order for a F-Series fund (such as RBF2011) in a discount brokerage account it will be rejected later.
6. The multiple savings accounts from TD Bank and Royal Bank are equivalent. They are offered by subsidiaries and can be used to work around the $100,000 CDIC deposit insurance limit.
7. Most of these high interest savings accounts are available through TD Waterhouse. Your mileage may vary at other discount brokers. For instance, only RBF2010 is available to clients at RBC Direct Investing.
Update (Oct. 22, 2010): RBC now offers a similar savings account. Fund Code is RBF2001. Most of these funds are now yielding 1.2%.
Update (Oct. 31, 2010): B2B Trust High Interest Investment Account. Fund code is BTB100. Not available at TD Waterhouse. (See Rob Carrick’s column How to get some bang for your safe bucks).