Tag Archives: brokerages

Which Brokerage is Better for GICs: InvestorLine or Investor’s Edge?

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Just because you don’t want to buy stocks does not mean you don’t want to have a discount brokerage account. If you keep a large amount of money in GICs for any reason, a self-directed account can allow you to easily “shop” for the best interest rate by just scanning a list and clicking on your choice. Which may lead you to ask, is Investor’s Edge or InvestorLine better for buying GICs?

Today the Better Brokerage for GICs is Obvious

Some days it’s almost a draw between Investor’s Edge and InvestorLine but not today.

Today, September 23, I could buy a one-year non-redeemable GIC from Home Trust through InvestorLine for 1.96%. The best Investor’s Edge is offering for the same terms and conditions is 1.75% at ICICI Bank Canada.

(Remember that you can not get your money out of a non-redeemable GIC early.)

That’s only a 0.21% difference in rate. But with rates this low every point counts.

Remember the Minimum GIC Investment Requirement at a Brokerage

One thing to remember before opening a brokerage account solely to buy GICs is that you have to have a large pool of capital to make it worthwhile. Generally you will need $25,000 to avoid paying annual service fees to the brokerage.

The minimum purchase requirement for each GIC is also $5,000.

Why Use a Brokerage for GICs?

The advantage of using a brokerage is that you can shop from a long list of various financial institutions offering GICs at varying rates. You can actually watch day by day and see competition and other factors shifting different institutions rates higher (or lower.)

The rates are significantly better than the rates offered directly at a branch of any of the Big 5 Canadian banks. And you don’t have to phone and beg or demand for an extra .25 or .5% each time a GIC comes up for renewal. You just shop the list, pick and pay. (GICs are cashed out into your cash account at maturity. They do not automatically re-invest.)

What Did I Buy Today?

Obviously, I made my purchase today at InvestorLine. Which practically guarantees tomorrow the best rate will rise to 2% or higher. But that’s ok; I have another one maturing in a week and a half.

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Do you use a brokerage for GIC investing or do you prefer to use a Fiscal Agent? Please share your strategy with a comment.

Which of the Big 5 Brokerages Offer a US Dollar Side, Journal, Ledger or Sub-Account for an RRSP?

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The Big 5 Canadian banks are BMO, CIBC, RBC, ScotiaBank, and TD. Each of these has an associated discount brokerage. Only some of these brokerages, however, allow you to keep US stocks in a US dollar part of your RRSP account. This is a recap of which ones have this option, which is variously called a US dollar side, journal, ledger or sub-account.

What Use is a US Dollar Side to an RRSP Self Directed Brokerage Account?

Recently I set up a US dollar sub-account in my BMO InvestorLine RRSP account. This lets me buy and sell stocks in US dollars and receive distributions, dividends and profits without paying any foreign currency conversion fees.

I knew I couldn’t do this for our CIBC Investor’s Edge RRSP. They don’t offer this option.

Then today I was reading an article by the Canadian Capitalist posted in a roundup by Michael James on Money. I was surprised to read that at TD Waterhouse you can’t just set up this kind of US ledger in your RRSP.

That led me to do some quick checking into this issue. Here’s what I found out:

Which Brokerages Have US Dollar RRSP Accounts or Sub-Accounts

Brokerage US Dollar Sub-Account Available?
BMO InvestorLine Yes
CIBC Investor’s Edge No
RBC Direct Investing Yes
ScotiaBank iTrade No
TD Waterhouse Direct Investing No but with ***

*** According to the Canadian Capitalist article TD Direct Investing does offer a sort-of compromise. It lets you buy and sell stocks in US dollars and keep the monies in US dollars between buys. It does not, however, let you receive distributions and dividends in US dollars.

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Do you use a self-directed brokerage for your RRSP? Can you keep all of your profits, distributions and dividends in US dollars till you’re ready to spend them? Please share your experiences with a comment.