High Interest Rates for Savings, GICs, MMFs [2012]

Banking and Saving strategies, maximizing interest rates, budgeting, GICs, HISAs.
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Bylo Selhi
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by Bylo Selhi »

fundamental wrote:I would add that this practice in not exclusive to TD. All dealers offering F-class funds operate similarly.
I didn't mean to imply that this is unique to TDW. Indeed I've been ranting and railing against this practice by all players ever since E*Trade announced it would offer F-class shares to its clients and quickly withdrew in the face of industry backlash.
Discount broker E-trade has been forced to shelve plans to sell F-class funds directly to investors after two fund companies decided not to participate. Some insiders believe industry pressure halted the program.
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fundamental wrote:Does ING want to compete with the big 5 banks or Ally, ICICI, and the likes?
ING Direct scrambles to reinvent itself - Business - Macleans.ca
The company is caught between growing competition in internet banking and the power of the big six...

In an effort to shift its focus, ING Direct announced last month that after 15 years it was dropping its famous tag line, “Save your money,” in favour of something called “Forward banking” as part of a campaign to rebrand itself as a full-service bank...

It’s a move the company hopes will recast its brand as a place for Canadians not simply to park some money in a savings account, but move their business into ING’s expanding product line of mutual funds, chequing accounts and RSPs. “It’s a big change for us. It’s bold in some ways,” says Peter Aceto, ING Direct’s Canadian CEO. “The time has come for us to have a new battle cry to wake Canadians up and let them know that we can be a part of their everyday lives now, not just for savings.”

But the campaign belies just how desperately firms like ING Direct need to diversify their business. Profit margins are being squeezed for all banks these days, but particularly for direct banks, who rely disproportionately on the spread between the rates they charge for mortgages and the rates they pay for deposits. Those margins have been shrinking, as has the percentage of disposable income that Canadians are socking away in savings accounts...
Good luck with that, Peter :roll:
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by like_to_retire »

Just switched all my MIP510 to TDB8150 since TDWH no longer allows purchases of 3rd party Investment Savings Accounts.

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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by brucecohen »

like_to_retire wrote:Just switched all my MIP510 to TDB8150 since TDWH no longer allows purchases of 3rd party Investment Savings Accounts.

ltr
TDW told me that clients can still keep the 3rd party funds already held. They just can't buy any more. MIP510 and TDB8150 pay the same -- 1.25%. MIP710 pays 1.3%
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by like_to_retire »

TDW told me that clients can still keep the 3rd party funds already held. They just can't buy any more.
Yeah, but I sweep all my cash into, so it's not much good if I can't buy.

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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by BRIAN5000 »

I sent an email to TDW asking for anyone with Presidents accounts over One million be allowed to buy F-class funds. :rofl:
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by Bylo Selhi »

Good luck with that. Even if TDW wasn't motivated by greed (the 25 to 100 bp in trailers they collect for doing nothing) to reject your suggestion, they also don't want to antagonize the fund industry, including both fundcos and advisors, on whose good graces they depend on.
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by randomwalker »

Extra, Extra, read all about. Flight to quality, low risk, low return bonds for sale here in Ontario.

Ontario Savings Bonds Rates SERIES 2012
http://www.ontariosavingsbonds.com/en/series2012.html
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by Bylo Selhi »

optionable68 wrote:I sent an email to ING asking why they have become less competitive with their rates in 2012. Below is INGs response:... Sounds like they have lost the desire to attract and retain clients.
I was looking for somewhere to stash some cash today. This list is damning for ING and the Discount Broker HISAs:

Code: Select all

Peoples 2.1%
Ally    1.8%
CTFS    1.8%
ICICI   1.6%
ING     1.35%
DB HISA 1.25%
Apart from DB customers who can't as easily move cash around, ING Direct's is, by far, the least competitive HISA. That's quite a change from how they got established in Canada. Even some of the big-5 banks offer rates comparable to ING, e.g. BNS's PowerSavings pays 1.2%. I doubt many people would go to the trouble to open an account with ING and move cash from BNS in order to get an extra 5bp ($5 a year on $10k.)
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by gsp_ »

That's 15 bp but I agree.

Other options like CDF at 2% are out there for those who might be maxed out at PT and who don't live in QC.
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by BRIAN5000 »

gsp_ wrote:That's 15 bp but I agree.

Other options like CDF at 2% are out there for those who might be maxed out at PT and who don't live in QC.
http://www.financialpost.com/personal-f ... daily.html
TDW OFFERS CWB term deposits.

"If you are a CWB customer, it is important to know that your deposits at CWB will be combined with your deposits at CDF when considering the CDIC maximum coverage limitation"

https://www.canadiandirectfinancial.com ... nt_insured
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by optionable68 »

Bylo Selhi wrote: Apart from DB customers who can't as easily move cash around, ING Direct's is, by far, the least competitive HISA. That's quite a change from how they got established in Canada. Even some of the big-5 banks offer rates comparable to ING, e.g. BNS's PowerSavings pays 1.2%. I doubt many people would go to the trouble to open an account with ING and move cash from BNS in order to get an extra 5bp ($5 a year on $10k.)
I think Manulife Trust pays 1.30% and all the other banks pay 1.25%

Either way. I agree that ING has lost its luster.
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by Quebec »

I have some XSB and some XBB in my RRSP: this is 100% of the FI component of my retirement portfolio. On XSB the ytm is currently 1.7%, and 2.3% for XBB. Subtract MERs of 0.25-0.30% to get an estimate of the future nominal return on these funds. Depressing. Factor in inflation and taxes (upon withdrawal) and the real return is probably negative. And interest rates could eventually rise and then XBB might have even lower returns for a while.

So: I am looking instead at a 5 year GIC ladder from CDIC-insured institutions within the RRSP brokerage account. Liquidity is not an issue (non-redeemable is fine), and reaching the CDIC limit is not gonna happen for a while. I haven't called Questrade yet to see what they actually have (they don't post FI offerings online anymore), but I did some shopping around to see what is generally available. I imagine I could get something like Home Trust for the first 3 rungs (1.9%, 2.2%, 2.35%), then Manulife Bank for the final two (2.4%, 2.6%). Using these numbers, and assuming reinvesting for new 5 year GICs at 2.6% (i.e. rates don't change over time), I get a CAGR of 2.4% over the first 3 years, a time which is directly comparable to XSB's weighted average term of 2.9 years.

So there seems to be a 1.0% yield advantage to the ladder vs. XSB. For XBB the advantage is less, but again that's assuming rates don't change. Am I missing something?

(my calculation assumes the interest payments are reinvested at the original GIC rate for simplicity until a GIC matures, so it understates very slightly the overall return of the ladder)
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by Shakespeare »

I reached a similar conclusion on GIC ladder vs XSB.
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by AltaRed »

As have I for the most part. I have a few ST Corporate Bonds in there too instead of all GICs to juice it just a fraction.
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by IdOp »

Quebec wrote:my calculation assumes the interest payments are reinvested at the original GIC rate for simplicity until a GIC matures, so it understates very slightly the overall return of the ladder)
You can buy a "compound interest" GIC; it's basically like a strip bond so there are no interest payments to reinvest. This is a convenient option in a registered account.
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by StuBee »

Shakespeare wrote:I reached a similar conclusion on GIC ladder vs XSB.
And also GIC vs XCB.

XCB has a YTM of 3% and a MER of .4% for a net YTM of 2.6% and a duration of 6 years. Quebec's (as in the poster :wink: ) GIC ladder example has a current YTM of 2.3% with a duration of 2.5 years. In addition, this does not take into consideration additional transaction costs associated with the buying and selling of the ETF.

Personally, the cornerstone of my fixed income strategy is a 5 year GIC ladder as well as a 10 year strip ladder. It makes decision making much easier: I will just keep on rolling it until I need it! As well, on a yearly basis and if I feel it is appropriate, I add new capital to the maturing rung.
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by fundamental »

optionable68 wrote:I think Manulife Trust pays 1.30% and all the other banks pay 1.25%.

Either way. I agree that ING has lost its luster.
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by AltaRed »

Duration of XBB is much longer than that of a GIC ladder. They are not comparable. XSB has a duration similar to that of a GIC ladder.
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by fundamental »

Hello Moderator.

I thought this thread was designed for cash equivalents.

This thread appears to be wavering. Wouldn't bond ETFs be misplaced here and best on an alternate thread?
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by AltaRed »

fundamental wrote:This thread appears to be wavering. Wouldn't bond ETFs be misplaced here and best on an alternate thread?
:thumbsup: You have my vote on that.
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by Pickles »

AltaRed wrote:
fundamental wrote:This thread appears to be wavering. Wouldn't bond ETFs be misplaced here and best on an alternate thread?
:thumbsup: You have my vote on that.
My vote, too. I think the initial discussion was fine but, if people wish to explore it in depth, it should have a thread of its own. The chief topics this thread is intended to cover are: trends and changes in deposit, MMF and GIC rates, how to get the best rates, laddering, and CDIC insurance issues.
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by fundamental »

Bylo Selhi wrote:
optionable68 wrote:I sent an email to ING asking why they have become less competitive with their rates in 2012. Below is INGs response:... Sounds like they have lost the desire to attract and retain clients.
I was looking for somewhere to stash some cash today. This list is damning for ING and the Discount Broker HISAs:

Code: Select all

Peoples 2.1%
Ally    1.8%
CTFS    1.8%
ICICI   1.6%
ING     1.35%
DB HISA 1.25%
Apart from DB customers who can't as easily move cash around, ING Direct's is, by far, the least competitive HISA. That's quite a change from how they got established in Canada. Even some of the big-5 banks offer rates comparable to ING
I just withdrew 6 figures from my ING ISA. The rep asked why I was leaving and when I told her due to INGs low rates, she gave me a "yes I understand" as if she is getting used to all the withdrawls due to low rates. She also said she understands that 6 figures generally gives savers bargaining power to solicit a higher rate from a bank (although I have never tried that).

With todays ISA rates, I drew a line at 1.50% - any "non big 5 bank" below that will need to give a very good reason to get my savings account over a bank.
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by Insomniac »

Here's something on topic. Park cash for 6 months at 1.75%. $500 minimum.

https://www.coastcapitalsavings.com/Per ... _Cash_GIC/
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Re: High Interest Rates for Savings, GICs, MMFs [2012]

Post by Arby »

I found one minor advantage for TDB8150 over 3rd party HISA's at TDWH. The minimum purchase for TDB8150 is $100 (versus $1000 which was the former limit for 3rd party HISA's at TDWH). That saves me the trouble of waiting until I accumulate $1K in cash to make a HISA purchase.
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