Investing

Best medium to low risk place to park cash?

  • Last Updated:
  • Jul 21st, 2012 2:56 pm
Tags:
None
[OP]
Deal Expert
User avatar
Dec 11, 2005
18942 posts
1377 upvotes

Best medium to low risk place to park cash?

I have a bunch of cash that I want to stay fairly liquid but don't want it sitting in a savings account. Where do people park cash nowadays?
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
11 replies
Sr. Member
User avatar
Feb 25, 2012
627 posts
178 upvotes
SCARBOROUGH
Try DYN500

Dundee High Interest Savings Account 1.25% - Liquidity within one business day

CDIC eligible up to $100k
Deal Expert
Aug 2, 2001
15414 posts
5680 upvotes
If you want really high liquidity the High Interest Savings Accounts work. I believe Canadian Tire Financial offers 1.80%. There are of course GICs/bonds.

The problem with investing in market-based securities is that they are constantly moving up / down these days, even the stocks traditionally considered safe. If you are looking to take a little risk you could purchase one of the traditional dividend producing stocks (4-5%) and hope that the share price doesn't go down before you sell it. It would remain fairly liquid and provided you have a reasonable trading account the fees wouldn't really be too much.
[OP]
Deal Expert
User avatar
Dec 11, 2005
18942 posts
1377 upvotes
AntonyLingo wrote:
Jul 19th, 2012 10:38 pm
Try DYN500

Dundee High Interest Savings Account 1.25% - Liquidity within one business day

CDIC eligible up to $100k
Not sure how you missed "don't want it sitting in a savings account"... also FYI TDW does not let you purchase 3rd party savings funds, so this is out anyway.
TrevorK wrote:
Jul 20th, 2012 12:01 am
The problem with investing in market-based securities is that they are constantly moving up / down these days, even the stocks traditionally considered safe. If you are looking to take a little risk you could purchase one of the traditional dividend producing stocks (4-5%) and hope that the share price doesn't go down before you sell it. It would remain fairly liquid and provided you have a reasonable trading account the fees wouldn't really be too much.
Isn't there an altervative that exists between a HISA and a dividend stock? Some kind of money market fund?
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
Deal Addict
Aug 28, 2010
3521 posts
1218 upvotes
Halifax
It might help if you clarify what you mean by medium to low risk. Are you willing to accept a 10% loss, 5% loss, no loss, etc...
Deal Fanatic
User avatar
Jun 19, 2009
5248 posts
1069 upvotes
Scarborough
Do you mean in a brokerage account or in a bank account?
Deal Addict
Nov 26, 2005
3085 posts
249 upvotes
Vancouver
dont put too much faith in money market fund as well.

This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied - The Sequel
Submitted by Tyler Durden on 07/19/2012 - 19:05

Two years ago, in January 2010, Zero Hedge wrote "This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied" which became one of our most read stories of the year. The reason? Perhaps something to do with an implicit attempt at capital controls by the government on one of the primary forms of cash aggregation available: $2.7 trillion in US money market funds. The proximal catalyst back then were new proposed regulations seeking to pull one of these three core pillars (these being no volatility, instantaneous liquidity, and redeemability) from the foundation of the entire money market industry, by changing the primary assumptions of the key Money Market Rule 2a-7. A key proposal would give money market fund managers the option to "suspend redemptions to allow for the orderly liquidation of fund assets." In other words: an attempt to prevent money market runs (the same thing that crushed Lehman when the Reserve Fund broke the buck). This idea, which previously had been implicitly backed by the all important Group of 30 which is basically the shadow central planners of the world (don't believe us? check out the roster of current members), did not get too far, and was quickly forgotten. Until today, when the New York Fed decided to bring it back from the dead by publishing "The Minimum Balance At Risk: A Proposal to Mitigate the Systemic Risks Posed by Money Market FUnds". Now it is well known that any attempt to prevent a bank runs achieves nothing but merely accelerating just that (as Europe recently learned). But this coming from central planners - who never can accurately predict a rational response - is not surprising. What is surprising is that this proposal is reincarnated now. The question becomes: why now? What does the Fed know about market liquidity conditions that it does not want to share, and more importantly, is the Fed seeing a rapid deterioration in liquidity conditions in the future, that may and/or will prompt retail investors to pull their money in another Lehman-like bank run repeat?
Deal Expert
Aug 2, 2001
15414 posts
5680 upvotes
brunes wrote:
Jul 20th, 2012 6:45 am
Isn't there an altervative that exists between a HISA and a dividend stock? Some kind of money market fund?
I'm not sure you'll find money market accounts to beat out HISA/GIC's from the non-traditional banks (all those online only ones like CTFS and that). One thing to keep in mind is the tax treatment, obviously savings account income is taxed as interest income whereas dividend income is taxed much more favorable (as well as the, hopefully, corresponding capital gain).
[OP]
Deal Expert
User avatar
Dec 11, 2005
18942 posts
1377 upvotes
FunSave22 wrote:
Jul 20th, 2012 9:00 am
It might help if you clarify what you mean by medium to low risk. Are you willing to accept a 10% loss, 5% loss, no loss, etc...
Let's say, up to a 10% loss.

Basically - I just want somewhere inside my brokerage account to keep my funds liquid while I accumulate dividend payments enough to make my next purchase.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
Deal Addict
Aug 28, 2010
3521 posts
1218 upvotes
Halifax
If you want a 10% max loss you could try something like 75% short term bond fund or ETF and 25% equity fund or ETF.

The chance of something like this losing more than 10% is low, although there is still a slight possibility.
Deal Addict
User avatar
Aug 1, 2007
1367 posts
180 upvotes
Maybe something like a CDZ or CPD could be what you're looking for if you're interested in dividends. The problem though is that you'll have to be a holder on the date-of-record to receive distributions (much less frequent than daily interest calculations) and performance will be at the mercy of the markets. CPD should be much less volatile due to the nature of preferred shares but still not guaranteed. Of course depending on the dollar amount and holding period, the transaction costs for ETFs may eat up any benefit here.

A high interest savings account fund like Lingo suggested would be the way to go for low risk cash parking with next day liquidity - I saw TD had a series of them at similar rates: http://www.tdam.com/Content/Products/p_ ... asp?PID=27 but I'm not sure if they are available for DIY discount brokerage.

Top