Tag Archives: InvestorLine

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.

When Can I Spend a Dividend or Distribution Payable into my BMO InvestorLine Account?

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Recently, I checked when a dividend paid to a shareholder is actually credited to a BMO InvestorLine account. I discovered it is reported in the transaction history and in the cash balance for the account the day after it is payable but the transaction was back dated to the correct day. That left me wondering when I could spend a dividend or distribution: on the day it should have been paid into my InvestorLine account or the day after.

I Asked InvestorLine Using the Secure MyLink Email Function

I like getting answers to my investing questions in writing whenever possible. It gives me more time to reflect on what is said and to decipher the meaning. It also gives me a paper trail, or at least an electronic trail, in case things don’t happen the way I was told they should.

So I wrote a note using MyLink to ask, among other things, “If I tried to buy stock or a GIC on July 31 using the dividend I should have been paid on July 31, would the transaction go through properly?”

BMO InvestorLine Says the Dividend or Distribution Can be Spent on the Day It’s Earned

A bit to my surprise, the reply from the Client Correspondence Specialist said if “…you wish to trade using the proceeds, and you may certainly do so online. Kindly ensure to accept the warning message that may prompt you about insufficient funds for the trade.”

My understanding based on this email is that I can spend the dividend on the day it was payable, in this example on July 31, provided I accepted any warning messages from the system cautioning me that I was short by the amount of the dividend on the amount I required to complete the transaction.

A Cautious Investor May Prefer to Wait for the Dividend or Distribution to be Posted

It is usually clear what amount you should be receiving in a dividend or distribution payment. The source usually issues a press release stating what the amount will be per share.

That said, a very cautious investor might prefer to wait one more business day to be sure the payment arrives as planned into their InvestorLine account before re-investing the money.

If, however, there is an investment opportunity available immediately that may be gone by the following day, it’s encouraging to know InvestorLine will permit the purchase to proceed based on acceptance of the warning message.

Why Does It Take an Extra Day for the Dividend or Distribution to Appear in an InvestorLine Account?

I did also ask why it takes an additional day for the cash to show up in an InvestorLine account and for the Transaction History to be updated (and back dated.) The answer is a simple computer system requirement. According to the MyLink Client Correspondence Specialist, “it takes an overnight update to reflect the change in the account online.”

In other words, the account cash balance is not working in real time. There are other examples of this. For example, if you place an order to buy a GIC, your InvestorLine cash account balance does not debit the purchase immediately.

My Conclusion
I’m somewhat reassured to discover that InvestorLine just has a cumbersome computer system and not that it is deliberately withholding access to my distributions and dividends for a day for their own purposes. Sometime, I would like to test this process and see what warning message one receives if purchasing an investment using a distribution on the same day it is paid. Right now, however, I’m not in a buying mood.

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Have you ever re-invested your dividend or distribution on the day it was earned? Did it proceed smoothly? Please share your experiences with a comment.