[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.