Thank Goodness We Didn’t Dump the Bond Fund Yet!

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With the endless wailing and gnashing of teeth on the news about the recent drops in the various world stock markets, I decided to update our info on our work defined contribution pension plans. I’ve written about the fact that we have money invested in a PH&N Bond Fund in this plan. I’ve agonized for several YEARS now about whether to sell that position or not. Because I am very risk averse, and a great procrastinator, and am skeptical that any significant rise in interest rates is going to hit in the short term, I’ve left the money there. And frankly I’m glad I did.

How Has the Bond Fund Done Year to Date?

So far, till almost the end of September, the Bond Fund has returned a little over 3%. Since I have made no new contributions to the fund all year, that’s a fairly accurate number.
Until a couple of months ago, that number was closer to 6.5% and it seemed a bit small compared to the 13% return we were seeing on a “mostly European” international fund.

How Are the International and TSX Funds Faring During the Slump?

Well, the international, including US, funds are breaking even. They haven’t lost any money, yet. But it’s close.

The TSX fund is in the red.

How Is the Entire Defined Contribution Balance Looking?

Well, right now it’s essentially at a break-even point. The total amount has only grown by the amount of new contributions made this year. So technically, it’s losing money at whatever the rate of inflation is for the year.

If that doesn’t sound possible, it’s important to remember that the amount invested in the Bond Fund is fairly high compared to the amount invested in the TSX and international funds. And right now, I’m happy about that!

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Do you still have some money tucked away in a Bond Fund? Is it providing some comfort and peace during this time of turmoil? Please share your views with a comment.

Thanks RedFlagDeals for the 3% Daily Interest Savings Account Rate at Tangerine

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I was skimming RedFlagDeals financial chat forum recently and discovered that Tangerine had a promotion for “select” customers. They were offering a 3% rate on savings for 180 days to customers with significant savings. The “significant” level seemed to be a minimum of $10 000.

Did You Receive this Special 3% Rate Offer from Tangerine?

I checked our Tangerine email for any sign of this special offer but nothing was listed. Nor did I see it when I signed in.

I don’t give up that easily so I phoned Tangerine to discuss it.

What Did I Need to Do to Get the 3% Rate?

The Tangerine representative asked where I had heard about this “targeted” promotion and made a note on her computer.  She said that she could give me the rate only if I had $10 000 or more in my account immediately.

I offered to make a deposit immediately using the Cheque-In feature since the money was in an account not electronically linked to Tangerine. Unfortunately, that was not one of the acceptable routine ways to get the promotion started. I had close to the minimum $10 000, though, so my representative wanted to help me get this to work. She went off to discuss it with her team leader.

While she was busy, I realized that I actually did have enough in an electronically-linked account to transfer into Tangerine to bring my balance immediately up to the $10 000 requirement. So I went ahead and transferred it in, using a Pull request from Tangerine sent to my Big Bank.

So when she came back, with authorization to grant me the promotion provided I completed the Cheque-In deposit while still speaking with her on the phone, I was able to meet the requirement without that extra step.

How Do I Know the 3% Bonus Interest Rate Has Been Applied to my Tangerine Savings Account?

After she made the change on her computer, the Tangerine representative asked me to sign out of my Tangerine account and to sign back in. When I did, I could see the 3% rate had been applied to my Savings account by choosing my Savings Account and then clicking on the Account Info downward arrow.

How Long Is This 3% Rate Available at Tangerine?

The offer is only expected to be made until about July 1 2015.

Once applied, the interest rate is for 180 days. This is pretty respectable compared to most PC Financial and Tangerine promotions which tend to be for 60-90 days.

Why Am I Holding Onto a Pile of Cash at any Rate?

Well because we have some home renovations to pay for in the next 6 months, and a new car to purchase in the next year or two, and a big vacation (hopefully) in the next year.

None of the money for those things belongs in the stock market since we might need it exactly when the markets tumble on some unexpected news.

And yes, we save for all of those types of purchases before we make them. We could get a HELOC or run up our credit cards but we don’t. We have the cash ready before we buy these discretionary items.

So I’m pleased that while the money is parked waiting to be used it will earn more than the 1.75% offered right now at Oaken Financial and more than the 1.05% that PC Financial will be paying after their current promotion expires on June 30 2015. Thanks Tangerine and thank you to RedFlagDeals for pointing this out!

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Do you bounce your cash around to take advantage of the highest possible daily interest savings account rate? Do you save in advance for vacations and renos? Please share your strategies with a comment.

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