Saturday, February 22, 2014

Parking investment cash: High-interest savings accounts

Until I attended the TD Waterhouse investment seminar, I had never heard of a high interest daily cash savings mutual fund. Specifically, I'm speaking of TDB8150. This is the mutual fund recommended by the speaker at seminar speaker.

Paying 1.25 percent today, it is better to park your excess cash in this mutual fund that to let it sit idle in your self-directed investment account. The speaker said that an investor could open a TDB8250 mutual fund with as little as $100 dollars. Is this true? I'm not sure. The online info says an initial investment of $1000 is required. Subsequent investments can be as little as $100. Here is a link: TD Investment Savings Account.

Here is the nicest part of parking your money in TDB8150: Buy a stock and the system knows you have the funds tucked away in the mutual fund savings account. The system also knows that you can withdraw the money in as little as 24 hours. Certainly quickly enough to cover any stock purchase as it take three days for such a transaction to clear.

Simply buy the stock and then turn around and sell enough units of TDB8150 to cover your purchase. It is that easy. (This link to the Canadian Money Forum agrees.) One caveat: This may work only when one has a TD WebBroker account. Stay within the TD family and all should be fine but check that all this info is up-to-date before parking any money in TDB8150.

With my TD WebBroker accounts, I've begun parking all the free cash in my wife and my self-directed RSP portfolios in TDB8150. It feels good to be making at least a little money. It is almost enough to protect my cash from inflation shrinkage.

But, I have an RSP portfolio at another bank. I do not have just TD Waterhouse accounts. A little searching on the Web returned the following links with information on similar accounts offered at other Canadian financial institutions. Follow the links and learn all about parking your investment cash.

I learned about a similar fund offered by Scotia Online investing: DYN1300. I have begun parking the free cash in my iTrade account in DYN1300.

Canadian Capitalist: High Interest Savings Accounts at Discount Brokers
Canadian Couch Potato: Parking Cash in Your Portfolio
Educators Financial Group: Investment Savings Account
finiki, the Canadian financial wiki: High-interest savings accounts (HISA)

One last bit of advice. Both the Canadian Capitalist and the Canadian Couch Potato are excellent sites for investment information.

If I find I am leaving the cash parked too long in these funds, I may consider a GIC paying a little more interest.

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