Where to Hold Home Sale Proceeds | Page 2 | General financial discussion | Discussion forum

Norman1 said
The RBC Prime-Linked Cashable GIC is cashable any time. Just that there is loss of accrued interest and a $25 admin fee if cashed in the first 29 days.

Don't need multiple ones as each is partially cashable too. A single $2.4 million one can be drawn down multiple times with a minimum $1,000 per withdrawal:

3. Redemption Conditions: The deposit may be redeemed in whole or in part before its term has ended. In the case of a partial withdrawal, the minimum principal amount of money that must be withdrawn from the deposit is $1,000 and the principal amount of money remaining in the deposit after the partial withdrawal must be not less than $5,000. If the principal amount of money remaining in the deposit after a partial withdrawal is less than $5,000, the deposit must be redeemed in whole at that time. If the deposit is redeemed in whole or in part at any time during the first twenty-nine (29) days of the term, no interest is payable on the principal amount of money withdrawn and you will pay us [the Royal Bank of Canada if a deposit is with the bank, Royal Bank Mortgage Corporation (RBMC) if a deposit is with RBMC, and Royal Trust if a deposit is with Royal Trust Corporation of Canada or in Quebec, The Royal Trust Company] an Administration Fee [$25.00] for that redemption. We may deduct the Administration Fee from the proceeds of the redemption.

  

CIPF coverage limit at an investment dealer is $1 million for one's general accounts (cash accounts, margin accounts, TFSA's, and FHSA's) at the dealer.

For coverage of more than $1 million of holdings, one will need to divide the ownership of the brokerage accounts holding the ISA's at a dealer or have accounts at more than one dealer.

It's true that CIPF coverage is limited, but so is insurance on every other kind of deposit (except perhaps MB CUs, which I would not choose for a low 7 figure account, esp for someone in another province)- and at lower limits. If you put it all into the cashable GIC at RBC, it will only have 100K protection, through CDIC.

I agree with AltaRed that a big bank brokerage is not much of a risk, but, if it really bothers you, you can put a million in the brokerage divisions of more than one big bank.

But the only assets likely to be in a brokerage account is cash... so there would be no other assets, so would that not limit the coverage to $1M by CIPF?

smayer97 said
But the only assets likely to be in a brokerage account is cash... so there would be no other assets, so would that not limit the coverage to $1M by CIPF?  

The cash assets would normally be in a holding like a ISA or a MMF. The brokerage is only an agent for the issuers of those ISAs and/or MMFs. No different to holding stocks or bonds or mutual funds in the brokerage account.

mordko said

Having actual cash in a brokerage account is like giving interest-free loan to the brokerage firm. Why would I do that? A few hundred dollars might end up sitting in my brokerage accounts here and there but its a looooong way to a million.

Apparently, a median investor holds way too much cash in such accounts for reasons I don’t quite understand.  

It appears you haven't familiarized yourself with the whole thread.

I have. The confusion is because you have trouble with reading comprehension.

Loonie said

FWIW, my understanding is that CIPF protects against mismanagement of your money by the brokerage (e.g. rogue broker), and the actual ISA deposits are covered under CDIC. Actual MMF deposits are not covered by CDIC as they are true mutual funds
I'm sure someone will be eager to correct me if this is wrong.  

That is correct. That all said though, CDIC insurance is not really necessary for ISAs issued by the big banks. Similarly for MMFs managed by the big banks. They are not going to let either ISAs nor MMFs break $1 (or $10 as the case may be).

No one holds actual cash (in any significant amount) in a brokerage account for more than 12-24 hours....earning nothing.

Added: The OP is talking about low 7 figures in house proceeds. The simplest solution is to put it all in a big 5 (maybe big 6) bank for the 4-6 months of question.

Thankfully, BMO has a current register listing everyone who holds its shares.

This size of a loss would be a problem for CIPF which has around $1bn in liquidity. Also, “losing” the equivalent of $6bn would be beyond unprecedented:

“The biggest case ever handled by CIPF was the 1987 demise of Osler Inc., which accounts for almost 40 per cent of the $40-million in claims and related expenses paid out since inception. “

https://www.theglobeandmail.com/globe-investor/investment-ideas/what-protection-do-you-have-if-your-broker-goes-broke/article19783968/

In that case no shares miraculously disappeared but the broker simply borrowed unwisely, had inadequate provisions and CIPF covered the losses (which members were unhappy about).

I don’t think any Canadian investor has ever lost a dollar due to a brokerage going under.

CIPF helps tiny brokerages to market themselves. I am not sure how useful CIPF is to investors but nobody should fret about $1M limit.

With regard to the big bank discount brokerages I wouldn't factor in the scenario where the 45 million BMO shares are unaccounted for in a bankruptcy in any of my decision-making re. business with them, not even a bit.