Quote:
Originally Posted by eric2381
Higher rates for longer.
|
I agree. One thing the higher rates is good for is those that have money in savings, but you do need to make sure you actually get that higher interest. Most standard savings accounts are still paying less than 1%. There are however investment savings accounts paying 4.3 to 4.8% so you will want to have a look at those. Royal Bank has RBF2010 for Canadian and RBF 2014 for U.S., dollars. These are CDIC insured only for Canadian dollar versions, as are most others but you should double check if dealing with other versions.
RBC Documentation
Quote:
Deposit Insurance
This provision applies only to Canadian dollar deposits in the
RISA. Deposits payable in U.S. dollars, such as the U.S. RISA,
are not eligible for deposit insurance coverage provided by the
Canada Deposit Insurance Corporation (“CDIC”). The RISA
Provider is a member of the CDIC. A Canadian dollar denominated
deposit to RISA is a “deposit” within the meaning of the Canada
Deposit Insurance Corporation Act, and, as such, is eligible
for deposit insurance coverage up to applicable limits. Visit
www.cdic.ca or call 1-800-461-2342 for details about aggregation
of deposit balances by customer and other factors that may
impact the amount of such coverage.
|
These work just like a savings account, money is not tied up, you can access it within a day. TD, BNS etc all offer the same types of accounts inside their self trading platforms. Only issue is, if rates drop, so does the rate in this account, but it also goes up as rates keep rising.
Your other option is GICs. Fully CDIC insured to the limits, and best rates are on 3 years or less. You can usually negotiate up to 1% better than the posted rate, especially if it is new money to that Bank. You should easily be able to get 5.25% for 2 years on a non-redeemable GIC. So for example, if you deal at TD, and go into a BNS for a quote on moving 100,000 to them, they will typically give you a higher rate than your own bank will. Do not be afraid to ask them for their maximum discretionary rate, you don't get what you don't ask for. You may be able to use that quote to get your own bank to match the rate or just spread the money around to 3 or 4 banks, which helps with the CDIC limits anyhow.
You also have the option to buy tripe A rated government and senior corporate Bonds that are producing very nice yields out to 5 years. A laddered portfolio is easily constructed. Remember however that you must pay tax on all interest earned each year, if not in a registered plan, whether the interest is paid out to you or not.
I still think the dividend paying stocks are a better deal, the tax treatment of the income is much better, meaning you can earn nearly 50,000 tax free and the stocks have upside capital gain potential, but for those that are really risk adverse, at least now there are reasonable options.