The latest generation of high-rate savings accounts are an excellent place to park money you need to keep safe and available on short notice.
But if you want a better interest rate, consider keeping your savings in an investment account. The investment industry has created what amounts to a savings account packaged for investors. These products are called investment savings accounts and they’re typically eligible for coverage through Canada Deposit Insurance Corp.
Rates on ISAs range from 4.25 per cent to 4.5 per cent – expect these returns to track any adjustments down or up in the Bank of Canada’s overnight rate. Savings accounts from alternative banks and other financial institutions are as high as 4.1 per cent right now, but most are in the 2- to 4-per-cent zone.
ISAs are offered through big and small banks and traded like mutual funds, which means you need a fund code to place an order. A helpful listing of ISAs and their codes has been compiled by the Mr. Thrifty blog. Series A units are for everyday use, while slightly higher-returning Series F is generally for investors who have fee-based advisory accounts. It may be possible for DIY investors to buy a Series F investment savings account – give it a try.
The day-to-day utility of savings accounts at alternative banks have been improved in recent years and many now offer no-cost bill payments and e-transfers. ISAs aren’t quite as flexible. If you need access to money held in one of these accounts, you’ll need to go into your brokerage account or trading app and enter a sell order. Expect cash in your account the business day following the trade. In the investment industry, they call this T+1 settlement.
Once the cash has appeared in your investing account, you’ll need to get it into your chequing account so you can direct it where needed. These transfers are easiest if you have a broker or trading app in the same corporate family as your chequing account.
ISAs are designed as a productive place to temporarily park cash in an investment account. But at today’s interest rates, they have broader appeal. Some investors have used them as a complement or replacement for bonds, which have been volatile in recent years. As a savings product, ISAs do not fluctuate in price.
One of the big benefits of ISAs is that they can be bought and sold in most cases without commissions. Similar products in the exchange-traded fund world offer slightly higher yields, but some brokers charge commissions of $5 to $10 to buy and sell ETFs.
ISAs can make sense in non-registered and tax-free savings accounts. Using an ISA in a TFSA shields you from tax on your interest income, but mind your withdrawals. Taking money out of a TFSA and then re-contributing it in the same year puts you at risk of over-contribution penalties.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
