If you hold some cash in a self-directed registered account with a discount broker, you’ve probably resigned yourself to earning a pittance in interest. TD Waterhouse, for instance, pays nothing if your cash balance is less than $500,000. A slightly better choice for parking cash for investors who have accounts at a big-bank affiliated discount broker is the big bank’s own money market fund. But with the overnight rate stuck at 0.25%, money market funds also pay very little interest. For instance, the TD Canadian Money Market Fund (TDB164) has a current yield of 0.11%.

If you have a TD Waterhouse account, you can earn an interest of 0.7% on your cash balance with the Renaissance High Interest Savings Account. I learnt about this product through a reader comment in an earlier post on TD Canada Trust’s cash offer for new bank accounts (Hat tip to Cogsy).

The Renaissance Savings Account can be purchased as a mutual fund in registered accounts and non-registered accounts with the product code ATL5000. TD Waterhouse confirmed that there is no minimum holding period or no any fees of any kind are charged. The Savings Account is insured by CDIC. The initial minimum is $1,000 and the subsequent minimum is just $1. As the Renaissance Account is a product issued by CIBC Asset management, other discount brokers may carry the product. More marketing materials are available here and here.

This article has 30 comments

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  2. Is this equivalent of a money market fund?

    If I move money out of Renaissance High Interest Saving Account, when is the money settled and when can I se the money to buy stocks?

  3. There is also:

    Manulife Investment Savings Account (MIP 510) – http://www.manulife.ca/canada/mBank.nsf/Public/todays_rates

    ICICI Bank – IBN100 – http://www.icicibankfas.ca/popup_hiisa.htm#

    Dundee Investment Savings Account – http://www.dbc.ca/v2-en/index.php?option=com_content&task=view&id=72&Itemid=141

    Altamira High-Interest CashPerformerTM account – http://www.nbc.ca/bnc/files/bncmisc/en/2/high_interest_cashperformer.html

    All are bought and sold like mutual funds with no redemption fees.

  4. You can achieve a much better interest rate at Ally Canada.
    You will be insured by the CDIC and get 2% on a savings account.

  5. Thanks for bringing this to my attention.

    Can someone confirm that the CDIC would calculate this account separately for insurance purposes? For example, suppose I have $200K in an RRSP with TD Waterhouse, and put $100K in a TD GIC, and $100K in this CIBC product through my TD RRSP. If both institutions go bankrupt, do I get $100K in insurance for each of the institutions bankruptcies from CDIC insurance?

    Thanks again.

  6. MJ – It depends how your $200K at TD Waterhouse is invested. IF it is in GICs, then it is covered by CDIC. If it is other investments, like ETFs, mutual funds, stocks, etc. it is NOT covered by CDIC.

    An RSP is technically a trust so RSP money in a GIC, and non-registered money in a GIC is treated separately for CDIC purposes.

    But what I think you’re asking is how does CDIC treat the guarantees on these high interest savings account and their GICs purchased at a branch. In this case, you have to see which institution is actually holding the deposit for CDIC purposes. For example, it could be TD Bank, TD Trust, TD Mortgage Corp, etc. and while they are all TD, they are different for CDIC purposes.

    If they are different institutions as listed above, you’re covered up to the limit at each place…. if they are all the same company, you’re not covered beyond a single $100K limit.

    These high interest savings account use the mutual fund platform because it is cheap and efficient, but they are technically considered to be ‘deposits’ so if you have a GIC directly with the branch and holdings in these funds, you could be exceeding CDIC thresholds.

    If you own both, or are contemplating it, it will be easier to make the GIC issuer use a different entity (i.e. have TD issue the GIC through TD Mortgage Corp instead of TD Bank). In my experience, the people that work for the big banks become brainwashed over the years and seem to believe that separating institutions is unnecessary because the bank could never possibly fail (think Barings bank in England, Standard Trust in Canada, Lehman Brothers in the states as quick examples that this does happen from time to time). So obviously, banks can fail so don’t be surprised if you have to insist to get this done. It is very, very important.

    You should know that an advisor (if you use one) will receive a trailing commission of 0.25% on these assets. It is also important to know that those in fee-based accounts can access f class units of this that will pay 0.25% higher. Investors who choose to invest on their own without an advisor, will no doubt be rightfully frustrated that they can’t buy the f class units and receive the higher yield.

  7. Canadian Capitalist

    @Henry: I believe the funds are available in 1 business day.

    @Joseph: I was aware of the Altamira account but not the others. Thanks for the tip. I’ll write about it. It should be noted that some brokers *may* charge a fee. One of the complaints about the Altamira account was that E*Trade charged a $35 fee. It’s always wise to check with the broker first.

    @Lorne: Yes, Ally would work for non-registered accounts but accounts like this are very useful for cash parked in registered accounts temporarily.

    @MJ: In addition to Rob’s comments, you may find the CDIC website itself useful: http://www.cdic.ca/e/calculate/calculateinsurance.html

    @Rob: It is outrageous that discount brokers keep the 0.25% trailer. Apart from RBC’s D-series funds there is very little change on this front. To add insult to injury, some brokers charge (at least E*Trade used to) a fee on top of the trailer.

  8. Thanks Rob and CC for the feedback. Actually, I did look at the CDIC website before posting my question, but couldn’t answer it myself to my satisfaction. Rob, I appreciate the cautions you raise. I myself am of the view this financial crisis *may* not be over, and am always looking for ways to increase the security of my investments.

    I think Rob’s comment allows me to ask my question more precisely. If I invest in this CIBC product in a RRSP account from another institution (for example, TD Waterhouse), which institution is holding the deposit for CIDC insurance purposes? Is it TD Waterhouse, or CIBC? Is this CIBC product legally considered a separate account with a separate institution, or would it apply against the other brokerage account holdings (for example, a TD Bank GIC) when calculating the CDIC holdings.

    The CDIC website indicates certain assets held within an RRSP account are eligible for insurance up to $100K. So if you have two separate accounts with different institutions, you could be covered up to $200K, $100K for each account. So the question is, is buying this CIBC product the equivalent of opening up a new account with a separate institution? The “account” terminology used in the CIBC prospectus is what’s making me uncertain.

    Is this the same as holding a money market fund from another insitution in the brokerage account of a different institution?

    I hope that’s clearer. Thanks again for the responses.

    • Canadian Capitalist

      @MJ: If you hold the Renaissance Account in a TDW account, CIBC is the deposit institution. A TD Bank GIC will be considered as a deposit in another institution. Let’s say you have $300,000 in a TDW RRSP. You could deposit $100K with Renaissance, $100K with Manulife, $100K with Altamira and have the entire amount covered by CDIC. At least, that’s what I understand from this page: http://www.cdic.ca/e/depositinsurance/faq.html#rrsp

      “CDIC insures eligible deposits at each CDIC member institution up to a maximum of $100,000 (principal and interest combined) per depositor (or, in the case of joint deposits, per set of joint owners), for each of the following:”

  9. @MJ – It is my understanding that it is counted towards CIBC for the CDIC insurance but it would be best to contact the TDW broker line to ask them.
    @CC – Thanks for the mention! I started using XIC-XBB for my TFSA. I know that some people would not be comfortable with this option but it consistently delivers 4-5% per year in dividends. Trick with this is that you can’t get caught having to sell it when the price is down. The price can fluctuate 3-4% between each disbursement.

  10. I personally like to use the money market fund from PH&N. No increase in fees after the RBC takeover, not yet anyway…

    I don’t typically have a tonne of cash lying around, but its nice to get into the fund with the minimum, then subsequent transaction min. is quite low.

  11. CC: I agree that .25% trailer fee is on the high side. Maybe this product is available to full service brokerage accounts as well, since that is how much most money market funds pay in trailer fee.

    From what I read, RBC D series and PH&N D series pay a trailer between .10% to .25% to discount brokerages, which is much lower than regular mutual funds that pay a trailer between .25% to 1.25%.

    Trailer fees are here to stay. The question is how much and if it is disclosed to the investors.

  12. If there’s any doubt, then it’s better to err on the safe side… Open accounts at different institutions and make sure your balance in CDIC insured accounts are under the $100K limit. Most institutions these days seem to allow you to apply online, making it so much easier to spread your money around to stay under the CDIC limit.

    While on the topic of savings accounts at the Big 5 Banks… Bank of Montreal is offering up 1400 Air Miles if you open up a new SmartSaver account with them (a disappointing 1% APR) and put more than $10,000 in it before June 20th and maintain that balance until after September 30th. Since 1400 Air Miles is enough for a free short-haul flight, that’s worth a few hundred dollars in itself – if you enjoy flying that is… If interested, apply online and use Promo Code 2ROD104 to score your Air Miles!

    For disclosures, that’s a published Promo Code when you see the advertisement being circulated on mass mailing flyers. I don’t personally get any benefit if someone uses that promo code and I don’t work for BMO.

  13. As a rule, I would limit my investments to $95K so you have room to accumulate some interest and keep the entire amount under the CDIC limits

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  16. I am about to move my TD money market fund to either the Manulife Bank Investment Savings Account (MIP510) (0.70%) or the Renaissance High Interest Savings Account (ATL 5000) (0.70%), which one would be preferable? Would they have different MER that affect the actual yield?

    I have cross posted this on the post that discuss the other 4 options (Manulife, Dundee etc)

  17. @Sunny, I can’t speak to the MIP510 but I do not pay any MER for ATL5000. There are no fees to buy or sell ATL5000 at TDW. When I bought it, you could not purchase it through the web so they told me to call the broker line and they would do it for me. I have been able to buy and sell portions a few times that way. I am hearing that you may be able to buy it electronically now but I can’t say for sure. With the broker line the money was available the next day.

  18. Thanks Cogsy for the reply. I called TDW just now and was told the buy or sell of either the MIP or ATL has to be through the phone but just like you said, confirmed that there is no load, redemption fees, and holding period.

    Seems like Renaissance had just updated their rate to 0.80% this morning!


    • Canadian Capitalist

      You know what’s strange. I’m able to purchase ATL5000, MIP510 etc. via WebBroker at TD Waterhouse. I didn’t actually put through a purchase, but I’m able to enter an order. I don’t see IBN200 on the list though.

  19. CC, it would be interesting to see if the order would actually go through- I called both time and both reps were specific about them being only able to be purchased over the phone. I wonder if it will get rejected by the system later on if you put through a purchase

  20. @CC, I just spoke to TDW again, I was told that the MIP510 can be purchased online, regarding ATL5000, the rep said even though i could get to the purchase screen, once put through that the system would reject it. I went ahead to try the MIP510 online and will update once the trade has gone through.

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  22. This is a cross post from the high interest savings at discount brokerage thread:

    Just a quick update. Manulife (MIP510) is now showing 0.80% yield, the same as the also recently updated rate at Renaissance (ATL5000). Altamira and Dundee are also now at 0.75%, seems like rates are moving up!



  23. I am about to move my TD money market fund to either the Manulife Bank Investment Savings Account (MIP510) (0.70%) or the Renaissance High Interest Savings Account (ATL 5000) (0.70%), which one would be preferable? Would they have different MER that affect the actual yield?

    I have cross posted this on the post that discuss the other 4 options (Manulife, Dundee etc)

  24. @Steve- as stated in my previous post, seems like both yields are at 0.80% now so theoretically you should be getting the same yield. I am not sure which one would be preferable though, as I understand from previous posts on this thread, the yield is after MER.

  25. Has anyone dealt with the Ally Bank? 2% on hight interest savings account. Best rate right now.

  26. Some comments are saying that ATL5000 is not available for TDW online orders. I have done a number of ATL5000 trades in TDW Webbroker. Works fine.

    Now, it would be nice if there were a USD flavour of these hight interest funds, with a better yield than the usual US MMF’s.

  27. Canadian residents age 18 or older can contribute up to $5,000 annually to a TFSA.

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