Canadian self-directed brokerage accounts do not pay you any interest on your cash holdings. Most, however, do let you park your cash in units of a mutual fund that acts like a daily interest savings account. These accounts may have high minimum deposit requirements and pay a conservative rate. When the Canadian overnight rate dropped to 0.75% this month, what happened to the daily interest rate for funds held in brokerage accounts?
BMO InvestorLine AAT770
Canadian cash can be held in units of AAT770 at BMO InvestorLine. The kicker is you must have at least $5000 on deposit to stay in the fund/account. So if you only have $642 in dividend payouts, you can’t invest it and earn interest.
As of January 2015, AAT770 is only paying 1.00%.
UPDATE: On March 18, 2017 AAT770 is paying 0.75%.
CIBC Investor’s Edge ATL500
Canadian cash can be held in units at ATL5000 the Renaissance High Interest Savings Account fund at CIBC Investor’s Edge. On January 24, 2015 it was still posting a rate of 1.25%. UPDATE: On March 18, 2017 ATL5000 is paying 0.75%. Before investing, check the current rate on their website at https://www.renaissanceinvestments.ca/en/products/hisa.asp.
There is a minimum investment of $1000 which is better than at InvestorLine.
Note they are paying 0.30% on USD accounts which is more than InvestorLine.
UPDATE: On March 18, 2017 ATL5500 is paying 0.55%.
RBC Direct Investing RBF2010
Canadian cash can be held in units of RBF2010 at RBC Direct Investing. On January 24, 2015 it was paying only 1.000%.
UPDATE: On March 18, 2017 RBF2010 is paying 0.75%.
Note they are paying only 0.200% on USD holdings.
UPDATE: On March 18, 2017 RBF2014 is paying 0.45%.
A minimum investment of only $500 is needed, much better than at InvestorLine and Investor’s Edge.
TD Direct Investing TDB8150
According to their website, TD was paying 1% on TDB8150 in the past.
I have not checked the current rates offered for Scotia iTrade. I suspect they are also down so check if you have parked any cash recently and are concerned about this drop.
What Should You Do With Your Cash in Your Brokerage Account?
Given that 1% is lower than the rate of inflation, you may want to get your cash back to work as soon as possible. That may be more easily said than done, though, if you only have 47.10! (Although that’s how I ended up with some Caldwell Partners in a LIRA once….)
- How to Sell RBF2010 HISA Fund Units and Immediately Buy a Stock or ETF at RBC Direct Investing
- How to buy Units in a High Interest Savings Account Fund in a CIBC Investor’s Edge Account
- Testing a Buy (and Sell) of AAT770 at BMO InvestorLine
Do you find it cynically amusing how fast the banks can drop the interest rate they pay investors compared to how slowly they agree to drop the rate they charge borrowers? Does it perplex you how credit cards can charge 19%+ a year while savings accounts pay less than 2%? Please share your views with a comment.