[Note: This post was updated in October 2020.]
Many investors like to keep at least a small part of their portfolio in cash. If you want to keep this cash in your online brokerage account (alongside your ETFs and other investments) the most convenient way to do this is with an investment savings account (ISA).
ISAs are also called high-interest savings accounts (HISAs), although these days the rates are anything but high. These products have all but replaced money market funds as the safest way to hold cash in a brokerage account. Although they’re not mutual funds, ISAs have a FundServ code, which means they can be bought and sold the same way.
Investment savings accounts have no MER and no commissions to buy or sell. They pay a fixed rate of interest, usually calculated daily and paid monthly. You can add or withdraw money at any time, and transactions usually settle the next business day. Perhaps best of all, investment savings accounts are fully insured by CDIC for up to $100,000.
Many bank-owned brokerages offer only their own proprietary ISAs to clients. For example:
- RBC Investment Savings Account (RBF2010) is offered to RBC Direct Investing clients.
- TD Investment Savings Account (TDB8150) would be your choice at TD Direct Investing.
- BMO High Interest Savings Account (AAT770) is available through BMO InvestorLine.
- Renaissance High Interest Savings Account (ATL5000) is affiliated with CIBC.
- ADS Canadian Bank Tiered Investment Savings Account (DYN5000) is available to clients of Scotia iTRADE.
- NBI Altamira High-Interest CashPerformer (NBC100) is affiliated with National Bank of Canada.
I wish these products were easier to buy. BMO Investorline has a $25,000 minimum for any non BMO money market or t-bill funds and these apparently fall into that category. No way am I going to be holding $25,000 in cash in my discount broker account unless my portfolio was in the range of $500,000 or so.
We currently have our money parked at ATB earning 1.3%, not the best rate, but it’s 100% insured thanks to The Alberta Treasury.
Just waiting for the market to stall and nose-dive before buying into it.
Here in sunny Australia ( Not, 300mm yesterday), the dollar has climbed to 0.99 US$. It is the highest since the Au$ was floated. The cash rate is 4.5% and probably going up in a fortnight. Australian term deposits are 6.5-7% pa. So why don’t you fellow Canadians open an Australian Cash Management Trust?
Thanks for the info. I was not even aware of these.
They make sense for registered accounts but for non-registered accounts you can just transfer the cash into a savings account (many pay over 2% now).
@Calvin: A good point that I should have made more explicit. These investment savings accounts only make sense in an RRSP, RRIF, TFSA, or other type of account where money cannot be moved in and out without consequences. If you want to stash cash in a non-registered account, it’s hard to beat ING, Ally or another online savings account that is CDIC insured.
I parked my cash in RBF2001 through TDW, purchased directly on line, very easy, no transaction fee, not sure about 0.25% commission mentioned in the post.
@Kemi: Thanks for the comment. I am starting to think that the dealer compensation is baked in: that is, the investors gets the posted rate, and fund company pays the dealer an extra 0.25%. This would be comparable to what happens when you buy a GIC from a deposit broker. The broker gets a commission from the GIC issuer, but this accounted for before the investor is told what his or her rate of return will be.
Just tried to put an order through for the Manulife product (MIP510) via Qtrade. They’re asking for a $1000.00 minumum deposit.
Could not find the Dundee product on the mutual fund list at Qtrade.
I got ATL5000 a few months ago when it was paying 0.75%. Nice to see it’s up to 1.15% . What about parking cash in U.S. dollars in, or outside, registered accounts? One might want to buy US securities or rebalance out of C$ given its appreciation. As far as I can see, the best in terms of rate and convenience is ING Direct’s U.S. dollar account, paying 0.75%
@Larry: Both Dundee and Altamira have USD versions of these investment savings accounts, and these may be eligible for registered accounts, but I’m not certain. If you’re investing outside an RRSP, then I’d agree that something like an ING US dollar savings account is far superior. (Of course, none of these options are eligible for CDIC insurance.)
@Jon: Thanks for the QTrade tip. By comparison, Scotia McLeod lists the Dundee fund, but not the Manulife. I would definitely suggest that readers put in a phone call to their broker, since the offerings and conditions seem to vary a lot.
I too use ING’s USD account, but would like the security of the FDIC and better interest. I am a Canadian/U.S. citizen. Called the U.S. Treasury and IRS to find out if I could legally open a U.S. bank account, they said no prob as long as I have a SSN and U.S. passport! That said, not a single “bricks and mortar” or “virtual” bank will open a account. Any other ideas as to where to place 5 figures of USD?
One very important feature of buying these funds through a brokerage is the fee they charge you each time you take any money out…Last time I took money out of my Altamira Cash Performer fund through TDW I was charged $33.75….I called and was told for every withdrawl this is the fee on these high interest accounts…No charges to deposit but they kill you on the withdrawls…..Do your homework before you invest your $$$$…
@Mary: Thanks for the heads-up. Was this an early redemption fee (less than 90 days), or do they charge you anytime you make a withdrawal, no matter how long you held the fund?
I made several withdrawals from my RBF2001 savings accounts at TDW, one inside and the other outside RRSP. No fee. The money was in there for less than 30 days. I called TD Waterhouse just now to inquire about NBC100 in addition to RBF2001 and was told there is no fee whatsoever, no early redemption and no commission. I trade online via WebBroker. Perhaps the fees have been waved as a result of a recent policy change?
Regarding parking cash in US dollars, would buying a new york listed us/cad etc work? I know horizons has a US one but it’s leveraged.
@Mary – Altamira Funds are in the “Transaction Fee” group of fund families at TD Waterhouse. There are no fees to buy or switch but a $45 fee to sell (-25%=33.75 when using Webbroker).
RBC, Renaissance, & Manulife funds are in the “No Transaction Fee” group and there are no fees period.
Link for TD Waterhouse Fund families
The TD WH $1000 minimum applies on the High Interest funds.
I believe the Dundee fund falls under Dynamic (DYN) and is also a no tranaction fee fund.
@Gaby: The currency ETFs you’re referring to are definitely not appropriate as a savings vehicle, even if they are not leveraged. I think the one you’re talking about is the CurrencyShares Canadian Dollar Trust (FXC). I suppose these ETFs could be used for short-term hedging, but mostly they are speculative investments for people who think they can guess where currencies are headed. Stay away!
@CdnCouchPotato: But as a non-correlated asset class, could FXC be useful as part of a lazy portfolio (or maybe it’s not very non-correlated)? I’ve always been curious in general about how to incorporate currency in a portfolio, without having to muck about with forex trading, or are these ETF’s just too volatile to have any meaningful place in a passive portfolio?
CCP, you got the best money blog! This really helps me. Although, 0, 1, or 2 % here and there won’t make a big difference in the short term, for my amount of cash.
@Checkers: I also have some ‘cash-for-the-crash’, but certainly not my whole portfolio!
@Gaby: A currency is not an asset class because it has a long-term expected return of zero. The best way to diversify currency in a portfolio is simply to hold US and international stocks in their native currencies without hedging.
12% GIC??? All I can say is, wow.
My head in 1993 certainly wasn’t on investing, I wish it was. I’d be close to retired now :) Oh well, that was a good, fun, second year for me at the U of O.
Thanks for sharing your comments everyone, I need to checkout what TDW offers.
@5W1H Wells Fargo was happy to open an account for me last year. No SSN/ITIN or US passport needed. I have the basic no-interest checking account, so that keeps things simple tax-wise. If you have an account that generates interest income (I know this is what you’re really looking for), you may qualify for an ITIN (SSN for foreigners) so you can pay US taxes on it. Its been a while since I read the ITIN requirements so I don’t know for sure if bank account interest entitles you to an ITIN.
I am sure the displayed rates are not managed rates. That is to say your advisor set up the account for you and will help facilitate any deposits and withdrawals. The rate is subject to discussions with your advisor.
In this case Series F has no advisor fee and Series A does.
A copy and paste from their email:
Dear Valued Partner:
Dundee Bank of Canada will increase its C$ Investment Savings Account rates, effective October 14, 2010:
Series F (DYN 550): 1.45%
Series A (DYN 500): 1.20%
Conveniently available through FundSERV;
Competitive 0.25% trailer on Series A;
TFSA (Tax Free Savings Account) and RRSP-eligible.
Corporate (includes trusts, foundations and personal holding companies):
$7.5 million CAD and USD combined, per depositor.
Personal: No maximum. For amounts over $7.5 million, please contact your
Dundee Bank of Canada wholesaler prior to placing your FundSERV trade.
The Dundee Investment Savings Account, available in both C$ and US$, is always a great solution for your clients’ short-term investments and cash savings, especially as a safe haven when markets are volatile.
The Dundee US$ Investment Savings Account* offers the competitive rates of 0.45% (Series F: DYN 450) and 0.20% (Series A: DYN 400).
Visit us at dbc.ca or call our team of Professional Bankers at 1-877-321-3111.
Thanks DG for your input, but I have been down that road.
1) U.S. banks are regulated by a plethora of federal and state regulators. Same bank different state, still a prob!
2) This is the nub of the problem. A U.S. institution’s latest self-serving twisted paranoid interpretation of the
“Patriot Act” appears to over-ride the data I received from the the “Feds”! After all, they are corporations
looking to cover their bums from the the slightest chance of prosecution by the Feds!
3) I have traveled a good deal through the U.S.. My experience has been, that outside of “major tourist
attraction areas” or “major money centre cities,” branch managers tend to operate like the bank branch is their
little fiefdom. (“Are you a client?” or “Do you have an account with us?” [I am not kidding.] DAH!)
4) Lastly, tellers outside of the above mentioned areas, do not seem to be trusted to exercise good
judgment in their daily interactions with non-clients/tourists.
Thanks again for your response,
Not sure where/how to search for high-interest invest savings accounts on GlobeInvestor?
@LL: I doubt there is any listing of these savings products, as they are technically not mutual funds. Since they pay a fixed rate of interest, there’s no performance data that would be useful.
Thanks for the heads up. I purchased the DYN500 the other day before reading Corlap’s entry. I found how Scotia McLeod Discount Brokerage makes their money, they only offer the A series (DYN500) of the Dundee fund and scoop the .25% difference between that fund and DYN550. Though the 1.2% is much better than the zero that I was getting.
Re: ATL5000 click link and scroll down about remuneration to …
Seems that the best rate is MIP710 Manulife Trust ISA currently yielding 1.25%. MIP510 Manulife Bank ISA is yielding 1.2% as is RBF2001, ATL5000, among others. They are all insured by CDIC. Anyone have any experience with MIP710 or know why it would yield higher than MIP510 or others?
Just got off the phone with TDW, all 5 of these Investment Savings accounts all require a minimum of $1,000 with TDW and all are currently yielding 1.2%. So, how would you pick one over the other or is it just a toss up and make sure you keep your CDIC limit for each institution < $100k.
@Freddie: You got it. They’re all equally safe, and if they’re all paying the same rate, there’s no difference between them.
If I have $1000 in one of these savings products, can I withdraw, say, $100, leaving $900 remaining? It would no longer satisfy the $1000 minimum.
@Cliff: Not sure about that. It likely depends on the brokerage you use: I suggest calling them to ask before making a deposit.
Wow I just discovered this, thanks for posting! Looks much better than the .21% the TD m/m fund gained last year, which is where I was going to park my cash.
Talked to TD Waterhouse Discount Brokerage re parking cash in a US dollar account and they suggested Dundee DYN400 and Manulife MIP511. $1000 minimum for both, but no purchase or redemption fees.
Just want to share that DYN gives you 50% margin whereas MIP gives 0% margin with TDW margin account.
Probably because MIP unit price is $1 vs DYN $10.
I have $25,000 USD CASH that i have no clue what to do with. Ideally, I would like to put it into an account that if i need to access it for an emeregency it would be available while gaining interest). Obviously, i do not want to exchange it to CAD because the rates are terrible – but i am looking for ANY help on this please!!
@DD: Why not just open a high-interest savings account or money market fund in USD with your bank? You probably won’t earn more than 1%, but there’s not much you can do about low interest rates if you want to have the money available as an emergency fund.
@DD Why not convert it to CAD and deal with it more conveniently? Are you concerned about the fees your bank will charge to exchange, or the exchange rate itself?
I just noticed that the code listed for the Royal Bank fund (RBF2001) is not correct (or maybe out of date?). The correct code is RBF2010.
Oddly, RBC doesn’t seem to publish the code for this fund anywhere. I was told about it when I phoned their helpline on an unrelated matter.
Re: 1993 Five Year GIC paying 12%
He didn’t keep the Canada Savings Bond flyer that paid 18% in the 80’s?
At that point the interest rate was priced once a year so that when they were selling the bonds, everyone else’s rates had dropped. If I recall correctly, the spread was about 6%. That’s one bond I maximised and kept to maturity!
I’ve been looking to park cash for my TFSA, RRSP and non registered investments and I’m having difficulty understanding these discussions as I’ve found at least one institution that offers 2% annual with no or nominal minimum deposits: Steinbach Credit Union in MB. Am I missing something? Maybe that its not CIDC protected?
@Ron: Two points to understand here. First, the products listed above are similar to mutual funds, so you can hold them inside a discount brokerage account along with your other investments. The account you describe from Steinbach is a stand-alone account. Second, make sure you check that Steinbach is CDIC-insured. Typically the Manitoba credit unions are insured by the province, not the federal government.
Great article! Is there a website which lists all the available accounts and their yields?
@Sameer: I don’t know of any website that lists all of these in one place. I think you will find that their yields are all about the same.
Here’s what I have at TD Waterhouse:
Symbol Load RRSP Currency Price Change Yield
Buy Sell RBC INVESTMENT SAVINGS ACCOUNT 10-Jun-2011
RBF2001 N Y CDN 1.00 0.00 (0.00%) 1.2
Buy Sell MANULIFE BANK INVESTMENT SAVIN 28-Oct-2011
MIP510 N Y CDN 1.00 0.00 (0.00%) 1.25
Buy Sell RENAISSANCE HIGH INTEREST SAVI 28-Oct-2011
ATL5000 N Y CDN 1.00 0.00 (0.00%) 1.2
Buy Sell DUNDEE INVESTMENT SAVINGS ACC 27-Oct-2011
DYN500 N Y CDN 10.00 0.00 (0.00%) 1.2
Buy Sell ALTAMIRA HIGH-INTEREST CASHPER 28-Oct-2011
NBC100 N Y CDN 1.00 0.00 (0.00%) 1.2
Buy Sell MANULIFE TRUST INVESTMENT SAVI 28-Oct-2011
MIP710 N Y CDN 1.00 0.00 (0.00%) 1.25
Buy Sell MANULIFE BANK INVESTMENT SAVIN 28-Oct-2011
MIP511 N Y US 1.00 0.00 (0.00%) 0.2
This may sound silly, but I have about half a million in cash in my small-business acount, which I plan to eventually invest for income and growth, but right now the markets are so unpredictable that I would rather wait for a while for things to settle. Any suggestions as to what would be the best way to get some income on that amount of money? I looked at choices like Ally and ING, but the insurance covers only $100,000, the rest would be uninsured…
@Cristian: If you are looking for an investment with a guarantee, I suppose the only option is to spread your money across five financial institutions ($100K at each). This is a nuisance, but it does give you the protection you’re looking for. Any other investment (such as government bonds) carries some risk of price decline.
Since comments have been made recently and responded to by CCP, here are some updates on this topic.
IBN 100 from ICICI bank pays 1.4% which AFAIK is the top rate out there for brokerage HISAs. http://www.icicibankfas.ca/popup_hiisa.htm
TD introoduced 4 new HISAs each coming with its own 100k CDIC protection and paying 1.25%. TDB8150 TDB8155 TDB8157 TDB8159