"High Interest" rates at discount brokers | General comparisons | Discussion forum

Considering that RBC Action DIrect currently pays me NOTHING in interest for my cash balances in any of my investment accounts, I plan to look into these. 1.0% is much better than nothing at all.

Alas, given the current volatility of the stock market, I find myself with more cash than usual as I am reluctant to commit to buying shares.

Brian said
The correct investing strategy is to do regular monthly investing diversifying in quality stocks over a period of time (not putting all your cash in the market at one time)

"Correct" according to whom ? It certainly would be news to Vanguard:

https://pressroom.vanguard.com/content/nonindexed/7.23.2012_Dollar-cost_Averaging.pdf
"""In this paper, we compare the historical performance of dollar-cost
averaging (DCA) with lump-sum investing (LSI) across three markets:
the United States, the United Kingdom, and Australia. On average, we
find that an LSI approach has outperformed a DCA approach approximately
two-thirds of the time, even when results are adjusted for the higher
volatility of a stock/bond portfolio versus cash investments. This finding
is consistent with the fact that the returns of stocks and bonds exceeded
that of cash over our study period in each of these markets. """

Agree, there is no one "correct" investing approach. Depends on your age too. Dow Jones average peaked in 1929 and didn't get back up to 1929 level until about 25 years later so DJIA index investors (if there had been any) would have netted zero for about 1/3 of their lifetimes. And don't get me started on real estate - a relative's family purchased the family farm in Ontario in the 1880's and the farm was sold for about the same amount in the 1950's (lost 90% of its value in the 1930's). Of course, we're much smarter than previous generations and history is irrelevant so those things can never happen again.............right?

Why the article doesn't mention anything about the best online brokers like Qtrade, Questrade, and even CIBC Investors Edge? The fees on all these three platforms are more reasonable than those mentioned. Also Questrade has no Fees for maintaining all kind of Registered accounts (with no minimum balance).

I am in the process of opening my account with them but so far liked them (except the lengthy process of opening the account).

In Scotia iTRADE accounts, one can buy these two:

1. DYN500: Hollis ISA (Series A)
2. DYN1300: The Bank of Nova Scotia ISA (Series A)

The current rate sheet for them is at Scotiabank Advisor Deposit Services: Rates.

Loonie said
...

Interesting article from Vanguard. It refers, as does Brian, to the situation where one has a chunk of money available and has the option to put it all in now or dribble it in bit by bit.
The apparent result, according to Vanguard, is that you're usually better off to put it in all at the beginning. This is quite consistent with the oft-stated view that "it's not timing the market, it's time in the market" that counts.

On the other hand, there are situations where this doesn't work to the investor's advantage. The Vanguard research shows that a lump sum investment would bring superior returns about 2/3 of the time. But what about the other third? That is where DCA may have an advantage.

Vanguard allows for this possibility by saying "if the investor is primarily concerned with minimizing downside risk and potential feelings of regret (resulting from lump-sum investing immediately before a market downturn), then DCA may be of use."

It is unfortunate that Vanguard has chosen to cloak regret over lump sum investing which produces negative results in terms of an emotional concern, as if it is somehow a sign of limited intellectual integrity.

Vanguard's characterization is on the mark. The concern is really just emotional. When one buys a stock, sometimes its value does fall below one's cost afterwards temporarily. That is something stock investors learn to deal with.

What really matters is the value 10 years from now (the time horizon in the Vanguard article) and the dividends along the way.

The emotional ups and downs is one of the challenges of investing in stocks. Everyone understands that one should buy low and sell high to be successful. But, people who actually try to do that find that buying is emotionally harder to do when things look gloomy and prices are low.

In fact, there are many situations when downside risk is a very legitimate concern. In times where markets are unstable, for example, you don't want to hit an upturn to invest all your money. Similarly, charts abound concerning the lifelong effects of buying into a downturn if you have just retired. Retirees, except the very wealthy, have no choice but to be concerned about downturn risk if they are in the markets.

Timing does always make a difference, one way or another. It's a question of what that difference is and how it relates to your circumstances, and how you choose to deal with it.

I've seen those charts. They assume the retiree has been talked into investing the entire nest egg into the stock market and then use a systematic withdrawal plan to do monthly or quarterly payouts to live on. I think that's a really stupid idea driven more by sales commission than good advice.

One should not put money into the market that one can't leave in for years. It would be much better for the retiree to place the money for the next five years of living expenses into a GIC ladder with maturities that match the required monthly or quarterly payouts.

With five years of living expenses covered, the rest can be invested into the stock market. The retiree will have to sell but can sell at opportune times to try to keep five years of payouts in the GIC ladder. But, if markets are bad, the retiree wait a year or two.

kanaka said

... I also recall when if first set up our TFSA accounts with Itrade we also set up a "non registered" cash account and then they put in either a quarterly or annual fee for the "non registered" account so we moved the few dollars over to our TFSA account.
....

My impression is that Scotia iTRADE is not very interested in clients with low activity and low assets:

1. $25 per quarter low-activity fee on each non-registered account of clients with $10,000 or less across all accounts and no commission-generating trades on any accounts during the quarter.
2. $100 per year on each RRSP/RIF/LIRA/LIF account of clients with $25,000 or less across all their accounts and fewer than 12 commissionable trades per year across all accounts.