Where to save $30K in QC right now? | General comparisons | Discussion forum

i am retired and in hindsight wish I had never invested in Mutual Funds and others here will say the same. They make everyone rich the MF company, the advisor and the advisers company....you get the chicken scratch.

So find the best one year rate for a TFSA.
Find the lowest or no transfer fee FI.

Keep in mind an FI can change their fee structure at any time.

Some of the FI's with no transfer fee are Oaken and Peoples Trust and Loonie may tell you of more.

You may or may not care....but for flexibility you might want to make sure the FI has an associated savings account and not just offer GIC's.

And you are absolutely correct if you can put it all in a TFSA....no taxes. Keep in mind if you pull your funds out you cannot recontribute till Jan 1 of the next year.

So if you put 30000 in a one year GIC today at 2.5%.
July 15 2017 it would be worth 30750
Jan 1 2018 you can recontribute to your TFSA 30750 plus what ever the annual contribution amount is 5500 or more if they increase it.

I use this site < (<click here) for rates other here may have there recommended sites as well.

there is merit in everything the others have said.

If you don't feel the time is right for the stock market, then don't invest in it. Simple! There is always risk, and there is no point in doing something you don't feel comfortable with. Longterm, yes, it should work out, but still no guarantees. Things can change in ways we can't predict.

Living in QC, your banking options are limited. Saver-Mom may have some advice on that.

Your reasons for looking at a one-year GIC are relevant. It sounds like you are anticipating the markets to be suitable for you in about one year. Howeveer, there is no way to know, and tying yourself into a specific maturity date may be problematic if that is your goal.

Yes,s you should put it into TFSA, with caveats as kanaka has outlined.

I agree that Peoples Trust and Oaken are probably your best bets right now. Most of the MB credit unions won't deal with you anyway, as you are in QC.

If you have the patience for it, you might be better off with HISA because of the flexibility. If your goal is to get into the stock market, then you can do this whenever you choose. By hopping around from one special rate to another and negotiating with Tangerine, you will likely do about the same as with GIC, but with more flexibility. For this, you might look at Tangerine promos or phone calls, EQ bank, etc., but of course those rates are subject to change at any time.

I wouldn't fuss too much about transfer fees per se. You just incorporate them into your calculations when you make the deposit. Peoples doesn't have any at the moment, and I don't think Oaken does either (not sure).

If you want to go to mutual funds or ETFs, look at the Couch potato site or buy Mawer Balanced Fund. I don't buy these myself, at least not right now, because I don't have a 20 year horizon, but they are as reliable as anything in that world.

Not to throw curve balls into the equation, but $30k is enough to start a discount brokerage account with most providers (without account fees) and that can be a TFSA account provided the OP is old enough (or in Canada long enough) to have accumulated $30k of contribution room.

A TFSA account with a discount brokerage will allow the OP to invest in anything from a GIC to a HISA or a mutual fund or an ETF or stocks or....or...or without having to withdraw from a TFSA or transferring a TFSA. Any of the discount brokerages will do albeit TD Direct Investing and BMO Investorline are likely rated better than others. The best one for the OP may be the one that is associated with the banking insitution that the OP is with.

The downside of a discount brokerage account is that one cannot get as good interest rates for HISA (0.75%) as one can get with online banks, nor GIC rates that are as good as with online banks. The OP needs to choose between flexibility and/or interest rate (if HISA and GICs are the focus of the OP). But if the OP eventually wants to be in the equity markets, starting now with a discount brokerage account is likely in his/her best interests.

As mentioned by NR, it may be best for the OP just to stick it in an Oaken type HISA for now, and spend some time (weeks/months) at the other forums, or I will add.... http://www.finiki.org as in introduction to financial planning and investing.

Lots of good points above.
You will have to eliminate Hubert though, because they don't serve Quebec.

You might also want to re-think your sense of timing re: buying into the stock market. Remember that it's almost impossible to time the market, and some would say it is in fact impossible. The best you can do is spread out the timing of your investments. Thus, one option for you would be to put most of the money into HISA or GIC TFSA, and a smaller portion (perhaps $5000-$10,000) into an ETF (e.g. at BMO or TD, where you can buy in-house funds recommended by Couch Potato. Someone can correct me if I'm wrong, but I don't think you even need a brokerage account for those.). Later on, perhaps in several months or a year, you could take some more out of the GIC/HISA and buy another ETF; and so on. This averages out your risk in terms of timing.
That said, for a long term investment such as you are planning, it probably won't make a lot of difference, but might make you feel more comfortable, to spread it out. Just make sure you choose a bank with no transfer fees for the cash portion, such as Peoples.

ClarkeKent said

I'm new to the forum as I've never had enough money to worry about saving it before, but have now come into a rather large lump sum that I want to plan well. I'm young, so had been planning to just invest my $30K in mutual funds or something, but everyone I've talked to said the markets are too risky right now.

So my question is, what bank should I go with to save that amount for about one year? I have enough TFSA room to put it all in a TFSA, so I assume that even with the lower rates compared to a HISA I will keep more of my money.…

Are there any loans or credit cards that could be paid off? It is not good to have $30,000 in a one-year GIC, earning around 2%, at the same time one is paying 9% to 18% on the outstanding balance of a credit card or 4% on a mortgage.

One could pay off the debt and afterwards invest the former debt payments.

As for the markets being too risky right now, keep in mind that Warren Buffet's father, who was a stockbroker, advised him to hold off as well. This is from Chapter 3 (Mr. Market and the Lemmings) of the book The Warren Buffet Way: Investment Strategies of the World's Greatest Investor:

When Warren Buffet began his investment partnership in 1956, his father counseled him to wait before making any purchases. At 200, the Dow Jones Industrial Average was too high, he said. Buffet, who started with $100, figures that, had he listened to his father, that is all he would have today. Instead, despite the general market level, he began investing the partnership's funds. …

I am now wondering if you have any emergency funds. It kind of sounds like maybe you don't, or not very much. If you don't have at least 6 months of living expenses in reserve (yes, some would say you don't need that much, but I believe you do) plus about 15K for periodic major expenses like new roof, new furnace, major car repairs, etc., then you shouldn't put any of this money into stock market or longer GICs. Just put it in a TFSA in a cashable GIC if you can find one that sells to Quebec. If not, put it in TFSA savings account, as you need to be able to access it. If you put it in cashable, break it into smaller amounts, so that you can cash some but not all if needed.

Otherwise, if you don't need emergency funds, take another look at paying down your debt. Remember that you are paying off your loans with after-tax funds. So, if your mortgage costs you $2000/month (not unusual in the biggest cities at least), add on your marginal tax rate. If your marginal tax rate is 30%, then the mortgage is really costing you close to $3000/month. Ask your bank to work out how much you would save annually if you put the money into the mortgage or car loan, assuming you have a clause which allow you to pay them down. Then you can compare apples to apples, as the TFSA is tax-free.

If you are going to do GIC, I think you'd be better off with Peoples or Oaken than with MB CU. Most of the latter don't deal with Quebec and their rates are no longer superior. If you want to do stock market, you might also consider the Tangerine Bank funds, which rebalance automatically and are pretty good for smallish amounts like yours.

It's good to know you are well "defended" in case of financial surprises. You might want to move some of that float into a HISA though, as long as you can keep track of upcoming obligations. If you're at CIBC, you're probably getting no interest or next to nothing on that money. It's a matter of personal choice though as to what you're comfortable with.

Maybe I don't have the mortgage thing figured out properly. It's not my strength, as I haven't had a mortgage for a long time. In general, I think it's safe to say you're usually better off paying it down though. Perhaps someone else can comment further on that.

As to what you might expect from your investments, you might find this thread useful to consider: https://www.highinterestsavings.ca/forum/general-financial-discussion/fpsc-updated-expected-returns/ Don't forget there will be bad years when you will lose some of your principal. It will likely come back up eventually, but you need to be psychologically ready for this possibility.

I don't think Tangerine and CouchPotato are in cahoots. I think it's just that CouchPotato thinks the Tang funds are a reasonable choice for someone who doesn't have a lot of money and doesn't want the responsibility of rebalancing it themselves. Diversification is key to success in investing, and with these funds you can get a lot of diversification with a small amount of money with relatively low fees, and they do the rebalancing. It's not the only answer, however, and CP seems to suggest that you would want to get out of there and take a different approach after you have more money - somewhere close to 100K as I recall - at that point you can create your own diversification by buying a variety of ETFs with lower MERs and cover the same territory or better. Their fees are relatively low, but not as low as many ETFs, but it's a nice one-stop-shop. I don't know of any other place where you can get all this with the rebalancing included, although there may be some. Rebalancing is where you make your money, in effect.

What Loonie says is all quite true and sound.
I might add that welthsimple is quite new, and there is a possibility that as assets rise, the MER may drop in the future. Their system also allows for greater flexibility in asset mix in that it has the capacity to make aportoflio that is more or less weighted in bonds to a greater extent the the 3 funds that Tang offers. (They appear to have about 10 options).
I do not have account with them though, so more than that I am sharing what I have read, and what I might suggest to others who may not want to go with TD (or Tang).

You are welcome.
Indeed the free 5k managed if I recall was only for certain period of time (like two years), but like so many sales people, this is ambiguous. It depends on how you sign up. So, as always, buyer beware.

As to control with MER, no they cannot control the ETF's per se, though they can control which one's they choose...
ALso, the more assets you have with them the lower the Management Fee is (0.5% under 10k I think and then at 50k .35 I'd have to dig again and double check though as they have updated their site since I last looked into this.)

Not sure about the Corporate ETF's. I suspect that they may use different one's depending on whether it is an adisor buying assets or an individual. I could be wrong though. They are certainly the cheapest and most appealing (Ithink at least) roboadvisor on the market in canada right now).