Tag Archives: RRIF

How to Buy Units in a High Interest Savings Account Fund at RBC Direct Investing

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UPDATE: This article is historical, from 2013. I no longer invest with RBC Direct Investing.

As I mentioned, if your minimum balance drops below $50,000 in market value at RBC Direct Investing, you will no longer qualify for $9.95 trades. That’s making me nervous about investing all of my money into an ETF or stocks quickly. While I’m dithering, I decided to park some of the money in a high interest savings account fund within my RBC Direct Investing RSP account.

For those who are investing in a non-registered discount brokerage account, please remember that transferring money out of a *registered* account at a brokerage to a higher-paying HISA at another financial institution is very cumbersome. It involves using a T2033 form and can often take 6-8 weeks to get the money moved in one direction. Buying units in a HISA fund is the only practical solution to this problem for registered accounts such as TFSAs, RRSPs, RRIFs, LIRAs, RESPs, RDSPs, etc.

What HISAs Can I Buy Within my RBC Direct Investing RSP?

According to information on the Canadian Capitalist website, the three Canadian dollar HISA funds available through RBC Direct Investing online are: RBF 2010, 2020 and 2030. They appear to offer the same terms.

It appears that you cannot buy units in high interest savings account funds offered by other financial institutions. A kind reader pointed out to me, though, that by speaking on the phone with BMO InvestorLine he was able to get access to other HISA funds there, as he had already bought the maximum CDIC-insured amount of AAT770, $100,000. It’s possible a similar reason might allow a customer to purchase other HISA funds by phone from RBC Direct Investing. Unfortunately, I don’t have enough funds in this RRSP to try to test this.

Buying Units of RBF2010 from RBC Direct Investing

  1. Sign in to your RBC Direct Investing account.
  2. Click on the Trade tab.
  3. From the horizontal list, click on the Mutual Funds link.
  4. On the Mutual Fund Order Entry Step 1 of 3 screen
    1. From the Account #: drop-down list, select the account within which you wish to purchase the HISA units.
      Check the Available Funds: number is what you expected.
    2. From the Action: drop-down list, select: Buy
    3. Beside the Amount: field click to select the radio button beside either
      • Dollars including Commission; or
      • Units

      Then
      in the Amount: field, type the number of dollars or units you wish to buy.

    4. In the Symbol: field, type: RBF2010
    5. Click on the Show Quote button.
      Check the details of the quote. Today for RBC Investment Savings Account Series A it says the NAVPS/Yield is 10.0000, the Currency is CAD, the Inv. Min. Initial is 500.00 and the RSP Min. Initial is 500.00.
      When I clicked on the RBF2010 link in the detailed quote, it opened a screen of information about the product. It states the fund is a No Load fund. It says to go to http://www.rbcroyalbank.com/products/isa/index.html to see the current rate.
      I did, and as of today in December 2013, the rate is set at 1.25% for the CAD funds.
      UPDATE: On March 18, 2017 RBF2010 is paying 0.75%.
      It also states that “Liquidity since your money is accessible when you want with no locked–in periods or maturity dates.”
      It all looks good, so I returned to the order entry screen.
    6. In the Contact Phone: field, type your phone number.
    7. Click on the Continue button.
  5. The Confirm Transaction – Step 2 of 3 screen opens.
    Review the details. Note it says subsequent investments can be $25 or higher. This is much, much better than InvestorLine.
    If you like what you read, click on the Confirm button.
  6. The Transaction Complete – Step 3 of 3 screen opens.
    Copy the Order ID number into a document and save it for future reference.
  7. I then clicked on the Order Status link from the horizontal list of links under the Trade tab. The order is properly recorded there.
  8. Under the My Portfolios tab, when I check the Available Funds, the amount I just spent has not been subtracted from my Available Funds. I will have to be cautious and not spend the same amount twice!

What Did I Learn From Purchasing Units in a HISA at RBC Direct Investing?

  • I found it very odd that I was not asked to enter my trading password to make this purchase.
  • I was not asked if I wanted the interest payments deposited in my HISA or paid back into my trading account cash balance. (InvestorLine asks this.)
  • I was pleasantly surprised to find that the minimum investment is $500 and the minimum additional contribution is $25. At InvestorLine and Investor’s Edge, the minimum investment is much higher.

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Do you park your surplus cash in a HISA in your online discount brokerage account? Does the phrase “high interest” make you laugh scornfully? Please share your views with a comment.

How Do I Start Getting $9.95 Trades at RBC Direct Investing Now I Have $50 000?

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UPDATE: This article is historical, from 2013. I no longer invest with RBC Direct Investing.

While on the phone asking where my money is, since it left ING Direct on November 7 and it still isn’t in my RBC DI account on November 14, I asked a more important question: “How do I start getting the $9.95 trading commission fee given that I will have $50,000 in my account.”

I remember several years ago when we set up accounts at BMO InvestorLine that we had to wait till month-end after reaching the minimum qualifying balance to get the reduced trading fee. (I suspect you can now phone them and ask to get the fee applied immediately once you qualify, but I’m not sure.) I wasn’t sure if we would have to wait with RBC DI as well or not.

When Will You Usually Get the Reduced Trading Commission Fee Rate at RBC Direct Investing?

The support person told me that generally the computer system will spot new qualifiers. The check is made once a month on the 22 nd day. It checks what the lowest balance was during the previous month. [Which is not what the website says. The website says it will check the asset balance on the last day of the previous month.] If the lowest balance was $50,000 then the account will be upgraded to $9.95 trade status.

Can You Get the $9.95 Rate Immediately at RBC Direct Investing?

Yes. Once you have the $50,000 minimum in your account you can phone RBC Direct Investing support and request a change. They should be able to update your account quickly. (They didn’t tell me *how* quickly, but the implication was it would happen overnight.)

I guess if my money ever arrives in my account I can test this!
UPDATE: It did; I can; and I did. The update was made over night. So the day after I phoned in, when I placed a test trade, the trading commission correctly reported as $9.95.

What Happens If the Market Value of my Portfolio Drops Below $50,000?

While I’m sure your stocks, ETFs and Mutual Funds will always go up in value, mine don’t. In fact, I tend to buy things right before they plummet in value.

So I sent a Secure Message to RBC DI to ask whether the $50,000 qualification applies to the Book Value (when I bought my stocks) or the Market Value (what they’re worth today). I waited with bated breath for their reply.

To my surprise and dismay, they replied “In order to qualify for preferred pricing of $9.95 you must hold $50,000 in market value on the last day of every month.”

That’s right: the *Market* Value of the account must be $50,000 or higher on the last day of every month to qualify for the $9.95 trading fee! So if your stocks take even a temporary dip on the last day of the month you will be back to $28.95 trading fees. It appears that changes in the fees, up or down, occur on the 22 nd of the month after the month-end balance went below or above $50,000.

Frankly, I’m not impressed.

Can I Get the $50,000 Discount by Adding Up My Accounts with my Spouse’s?

Yes. You can ask RBC DI to add up the assets in various accounts held by members of the same household such as you and your spouse. You have to phone them to ask them to do this. It is not automatic.

Where Do I Get $50,000 to Qualify

Of course the hardest part is coming up with the $50,000 to invest in the first place. That’s a lot of packed lunches and skipped designer coffees. With time and patience, though, you may get there sooner than you think.

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Did you get caught paying an excessive brokerage fee because you thought you’d get the better rate immediately once you qualified? Please share your experiences with a comment.