Where to park money in Canada in interest bearing account?

[farmboy44]

CASH.TO

TSX Traded, now yielding 4.8% annually

withdraw at any times with no penalty. Very good liquidity - makes it much more attractive than a GIC

[sumdumguy]

Money parked in One Year Variable GIC, Prime minus 1.85% - Take out anytime after 30 days.

[Maver]

CASH.TO

TSX Traded, now yielding 4.8% annually

withdraw at any times with no penalty. Very good liquidity - makes it much more attractive than a GIC

So how doea this work? Simply buy and sell cash.to shares through your trading account?
Any risk? If a black swan event were to occur, could you loose some or all of your money?

[farmboy44]

So how doea this work? Simply buy and sell cash.to shares through your trading account?
Any risk? If a black swan event were to occur, could you loose some or all of your money?

It sets back to 50$ every month on ex-div day (last day or two of the month usually). You are paid the spread (determined by interest rate) at that point. So if you bought Jan 3 at 50, it paid you 20c yesterday per share and is now back at 50. You don’t need to sell shares after buying, they just reset to the 50 buy price end of every month

Price modestly goes up through out the month, if you bought near the middle of the month you’d get :20 cents at the end still but your purchase value would be 50.10 ish instead

[farmboy44]

And you believe this to be better than GIC's ??

I’m not trying to give advice to anyone, but I do believe this to be advantageous just due to the liquidity and non-commital nature of it. Withdraw anytime without penalty. I don’t see rates falling any this year so the monthly payments are unlikely to drop.

At any rate, these shares (or any GIC) should always be held in a tfsa or rrsp if you have room. Interest gains on such investments are not capital gains, they are regular income - so if not in a tax sheltered account your 5% claimed posted returns can turn into 3% net pretty quickly

[Oliver88]

CASH.TO

TSX Traded, now yielding 4.8% annually

withdraw at any times with no penalty. Very good liquidity - makes it much more attractive than a GIC

Other good options:
CIBC is 5.7% dividend
Enbridge is 6.5% dividend

[farmboy44]

Other good options:
CIBC is 5.7% dividend
Enbridge is 6.5% dividend

But these come with possibility of your capital going down if the share price goes down.

With CASH.TO you know you do not stand a chance of losing on your initial investment.

At 4.8% Vs 6% many would take the gaurenteed thing.

[Richard5]

But these come with possibility of your capital going down if the share price goes down.

With CASH.TO you know you do not stand a chance of losing on your initial investment.

At 4.8% Vs 6% many would take the gaurenteed thing.

You also need to take into account the difference in tax treatment. Ignoring benefits of a TFSA, you do not pay much tax personally on a dividend but interest is taxed at full marginal rate. In company’s, dividends are still advantageous.

Personally i don’t like a lot of banks in portfolio, consider a utility like Fortis or Emera, if you don’t like those, take a look at a royalty fund like Pizza Pizza, A&W or even Boston Pizza.

[farmboy44]

You also need to take into account the difference in tax treatment. Ignoring benefits of a TFSA, you do not pay much tax personally on a dividend but interest is taxed at full marginal rate. In company’s, dividends are still advantageous.

Not sure why you are telling me this, I said this exact thing a few comments up

Edit: sorry to hear you don’t like banks in your portfolio. That’s a policy that must have costed you returns over the years.

[Oliver88]

But these come with possibility of your capital going down if the share price goes down.

With CASH.TO you know you do not stand a chance of losing on your initial investment.

At 4.8% Vs 6% many would take the gaurenteed thing.

That’s a good point and something to consider.

Maybe a different strategy for a 30-50 year old vs a 65-85 year old?

I like the DRIP program with the dividend stocks within a TFSA or RRSP.

[Oliver88]

Money parked in One Year Variable GIC, Prime minus 1.85% - Take out anytime after 30 days.

What company/bank has this GIC?

[shtferbrains]

Scotia was one but was gone last I looked.

[Guest]

A local one here had 4.95 , 1 year , cashable after 30 days

[Marusko]

For the first time in my career there is a little extra cash that I need to put somewhere for a year. Would like to collect interest and be zero risk. This is in Alberta, Canada.

Are there any savings accounts or T bill accounts or ?? that pay 5% or better?

Bank of Marusko offering 7% interest 1-5 year GIC, compounded daily, paid annually. No minimum balance.

note: CDIC insurance application in progress.