Personal Finance

High Interest Cash (< 5.02%) [CAD/USD] [CDIC: NO!] + Money Market ETFs

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  • Jan 29th, 2023 3:28 am
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Deal Addict
Jul 3, 2007
4088 posts
4566 upvotes
Toronto
ADenariusSaved wrote: These might be too low risk for the yanks lol...

This is all I remember when reading American books. I guess as they increase interest rates, you can get longer maturity T-Bills, but the newly minted ones will yield more. I remember I worked out with a university buddy on coop, and one day in the TTC, he was like, man, if I had a lot of money, I'd get T-Bills. I was like, wtf is that? Back in 2007, they were around 4.xx%'ish? Smart move because we crashed after that. The permanent portfolio will also use these, if relevant...

Example: NYSE: SGOV: https://www.ishares.com/us/products/314 ... y-bond-etf

These T-bill rates are around 4%, you'll probably find better stuff. I'm wondering if you can just punk the Treasury directly at treasurydirect.gov ? These are probably the safest assets known to man right now. Backed by full faith and credit of the USA and all its associated CNVs, Castle Bravos, F22s, M1s, Bradleys, 5.56's, and Blackhawks. Better than CDIC, or FDIC in their case.

Maybe a 'murican can help us out here. But as the rates are headed up, I wouldn't blow everything in one load, at least wait until Powell hikes the rate in the next 2 weeks if you go the direct route. If you go the ETF route, then it probably doesn't matter since they just roll everything anyway.
thanks, i will keep looking , was hoping there was an easy etf like here..... they do have special online offers sometimes through the treasury , not long ago 9% 1 year .... but only 10k max purchase
Deal Addict
Sep 19, 2009
2178 posts
937 upvotes
Toronto
https://www.ecfr.gov/current/title-31/s ... /subpart-B
§ 363.11 Who is eligible to open a TreasuryDirect ® account?

Only an individual or an entity is eligible to open a TreasuryDirect account. In order to open a TreasuryDirect account, an individual or entity account manager must have a valid social security number (SSN), be 18 years of age or over, and be legally competent. An entity must have a valid SSN or employer identification number. The account owner must have a United States address of record and have an account at a United States depository financial institution that will accept debits and credits using the Automated Clearing House method of payment.
[OP]
Deal Addict
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Jan 11, 2020
3966 posts
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Torontois @ 宇宙中心
Yeah, not for us Canucks for sure. He was asking for a dude in the USA. They have access to better stuff. I wouldn't be caught dead buying Canadian government treasuries directly. I like how their government has an RFD mentality of pushing their own sales. This is why I'm 100% invested in USA lol, that place is run by businesses/corps and are single-handedly focused on making money.
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Feb 12, 2016
263 posts
150 upvotes
PSA distribution is 0.171 this month Jan 2023 vs CSAVs 0.2071. Horizons hasn't posted anything yet. Does it make sense to sell PSA and buy CSAV for the higher distribution? Do this monthly for whichever has the highest distribution?
Deal Addict
May 13, 2005
4014 posts
4038 upvotes
Montreal
dealhawk1 wrote: PSA distribution is 0.171 this month Jan 2023 vs CSAVs 0.2071. Horizons hasn't posted anything yet. Does it make sense to sell PSA and buy CSAV for the higher distribution? Do this monthly for whichever has the highest distribution?
No, the distribution doesn't work like that. You have to see how many days since last month distribution they counted for this month distribution.
For example,
PSA from 2022-12-30 to 2023-01-27 ==> less than 30 days interest ==> lower distribution 0.1710
CSAV from 2022-12-22 to 2023-01-25 ==> more than 30 days interest ==> higher distribution 0.2071

You should invest in the fund that it projects the highest (interest rate - MER) for the current month.

https://forums.redflagdeals.com/high-in ... #p37128383
Jr. Member
Jul 5, 2017
180 posts
133 upvotes
Guys can people just basically use HSAV as a replacement day to day HISA? Especially if you're high income?

I've got around $30k in liquid cash that I plan to keep liquid and in a high income bracket. Have few thousand in chequing just for day to day expenses/bills, but I'll frequently need access to this capital with 1-2 weeks notice just to buy things and pay off CCs.

The verbiage around HSAV exceeds my financial knowledge, but with high interest savings accounts at best for me now (losing the Tang and Simplii lotteries) paying around 3% and taxed at 30-40%, would it make sense to just dump all of that money into HSAV and use it basically as a replacement HISA? Could well be 5%-MER after this coming week and taxed more generously.

My brokerage allows free trading of HSAV and withdrawal requests are processed in 3 business days to my bank.

I could lump purchase it as 30k and then withdraw as needed - could be thousands at a time, but sometimes I might want to put my paycheque into it. How do I know when I'm getting "ripped off" by whatever the NAV premium discount is, and is this ripping off as bad as using a 3% HISA with a high tax bracket than ~4.8% with capital gains as the tax implication? Like, would I actually end up losing money or going negative percentages, or just get lower than 4.xx%?
Deal Addict
May 13, 2005
4014 posts
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Montreal
ovaltene wrote: Guys can people just basically use HSAV as a replacement day to day HISA? Especially if you're high income?

I've got around $30k in liquid cash that I plan to keep liquid and in a high income bracket. Have few thousand in chequing just for day to day expenses/bills, but I'll frequently need access to this capital with 1-2 weeks notice just to buy things and pay off CCs.

The verbiage around HSAV exceeds my financial knowledge, but with high interest savings accounts at best for me now (losing the Tang and Simplii lotteries) paying around 3% and taxed at 30-40%, would it make sense to just dump all of that money into HSAV and use it basically as a replacement HISA? Could well be 5%-MER after this coming week and taxed more generously.

My brokerage allows free trading of HSAV and withdrawal requests are processed in 3 business days to my bank.

I could lump purchase it as 30k and then withdraw as needed - could be thousands at a time, but sometimes I might want to put my paycheque into it. How do I know when I'm getting "ripped off" by whatever the NAV premium discount is, and is this ripping off as bad as using a 3% HISA with a high tax bracket than ~4.8% with capital gains as the tax implication? Like, would I actually end up losing money or going negative percentages, or just get lower than 4.xx%?
For HSAV, people consider it a bit long term savings as they buy it one-time high premium price above the NAV, As its price swing up/down 0-40 cents, if you're lucky able to buy at low then with 40 cents swing up equals a month of interest already.

If you don't like the high premium of HSAV and want to avoid interest income then you could buy any other High Interest CASH ETFs and sell it before the ex-dividend date (need $0 commission fee broker for frequent buy/sell).
https://forums.redflagdeals.com/high-in ... #p36809504
Sr. Member
Aug 25, 2005
679 posts
81 upvotes
Mississauga
CSAV going ex div on Jan 25th - so sell on Mon 23rd ?
Deal Addict
May 13, 2005
4014 posts
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Montreal
fhirji wrote: CSAV going ex div on Jan 25th - so sell on Mon 23rd ?
The price will reset to $50 on the ex-dividend date Jan 25 and they will give us distribution (interest income)
So we could sell it one day before the ex-dividend date Jan 24 to avoid getting the distribution and rebuy it on ex-dividend date.
CI High Interest Savings ETF, which has an ex-dividend date of January 25, 2023
https://www.businesswire.com/news/home/ ... or-CI-ETFs
[OP]
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Jan 11, 2020
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X360 wrote: The price will reset to $50 on the ex-dividend date Jan 25 and they will give us distribution (interest income)
So we could sell it one day before the ex-dividend date Jan 24 to avoid getting the distribution and rebuy it on ex-dividend date.


https://www.businesswire.com/news/home/ ... or-CI-ETFs
We gotta watch that T+1 stuff?
Deal Addict
Aug 15, 2009
2564 posts
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Montreal
ADenariusSaved wrote: We gotta watch that T+1 stuff?
This is getting complicated for a couple of 10$ lol.
Deal Addict
May 13, 2005
4014 posts
4038 upvotes
Montreal
ADenariusSaved wrote: We gotta watch that T+1 stuff?
I think we should ignore those T+1 stuff.

For example, CSAV ex-dividend date = Jan 25, distribution = 0.2071.
So the CSAV price on Jan 24 could go up to $50.2071 or $50.21 and reset back to $50 on ex-dividend date Jan 25.
Assume we're able to sell CSAV on Jan 24 for $50.21 ==> we profit $0.21 / share if we bought it at $50 last month.
If we're worry about we will get distribution (interest income) as we should sell it on Jan 23 instead. Well, we welcome CSAV giving us extra $0.2071 distribution if we sell it on Jan 24. So we could get double profit ==> This won't happen.

So we shouldn't worry about T+1 stuff. Only need to sell one day before ex-dividend date.
Member
Sep 8, 2010
381 posts
123 upvotes
Chambly
I was going to put some USD cash into HSUV.U after reading the post here, but just saw that they are not accepting anymore orders.
Any other equivalent ETF that is considered a capital gain for taxes and pays well on USD funds?
Deal Addict
May 13, 2005
4014 posts
4038 upvotes
Montreal
mcu wrote: I was going to put some USD cash into HSUV.U after reading the post here, but just saw that they are not accepting anymore orders.
Any other equivalent ETF that is considered a capital gain for taxes and pays well on USD funds?
Although Horizons is suspended the subscription, we still able to buy/sell the HSUV.U and the price is very closed to NAV.
This suspension of subscriptions will not affect the ability of existing shareholders of HSUV.U to sell their shares in the secondary market at a price reflective of at least its NAV per share, assuming normal course market conditions. However, investors and potential investors should note that during a period of suspended subscriptions, the Manager expects shares of HSUV.U to trade at a premium to its NAV per share. While new subscriptions are suspended, Horizons ETFs is strongly discouraging investors from purchasing shares of HSUV.U.
https://horizonsetfs.com/ETF/hsuv-u/
https://horizonsetfs.com/horizons-usd-c ... in-assets/

If you have $0 commission fee broker then you could buy/sell any other High Interest CASH ETFs and declared as capital gain.
https://forums.redflagdeals.com/high-in ... #p36809504
Member
Sep 8, 2010
381 posts
123 upvotes
Chambly
The extra cash I have is in my business. I am with TD now but was going to move everything into IBKR. Am I making the right move of moving away from TD or another big bank and into ibkr?
[OP]
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Jan 11, 2020
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mcu wrote: I was going to put some USD cash into HSUV.U after reading the post here, but just saw that they are not accepting anymore orders.
Any other equivalent ETF that is considered a capital gain for taxes and pays well on USD funds?
Damn, getting Déjà-Vu here.

HSUV.U is still available for purchase from secondary sellers. Horizon's is no longer producing the ETF, but all those that are in existence can be bought/sold on the open market. You will have to pay a premium/discount though, but that premium COULD be less than the taxes you'd save, or can satisfy the 'stick it to the man' principles. It'll be a premium for the next while as rates are going up and the yield is good. I'd buy it before the US Fed hikes in a week or two?
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Jan 11, 2020
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mcu wrote: The extra cash I have is in my business. I am with TD now but was going to move everything into IBKR. Am I making the right move of moving away from TD or another big bank and into ibkr?
TD sucks, I have it, still have it. I have IBKR/QT and a few other banks as well. No issues. You can have more than one broker, but as you can see, I kinda forget where I put my money and the login/pass for the accounts...Plus someone told me estate planning would be a nightmare because I have 8 institutions looking to nickel and dime me. I'm going for National Bank and Disnat next. Don't do what I do, but the best guy in the game now is probably Desjardin's Disnat from what I'm reading on RFD - no commissions for anything on NYSE/TSX, no journaling fee for Norbert's Gambit (NBDB has this), Disnat would also have the research that I'd miss, but never read, from shutting down TD. IBKR is great for foreign market access and exotic products. Once/if I consolidate the 10 brokerages, I'm definitely keeping IBKR and one or or both (probably both) of the Québecers (Disnat/National Bank), and Scotia. I'm a financial polygamist/haremist except I'm no longer going to be paying any fees. I have similar amounts of bank accounts and credit cards =/...
Jr. Member
Feb 1, 2014
173 posts
104 upvotes
What are the implications of the merger of the Purpose Money Market Fund into the Purpose High Interest Savings ETF (PSA.TO) for existing PSA.TO holders?

I currently have money in PSA.TO through Wealthsimple Trade (it's commission-free so it suits this purpose well).

An article about the merger is below (I posted the full copy). Although it says that PSA.TO holders will not be affected in any way, there are all sorts of things in the below article that I don't really understand, because I'm a n00b. I'm interested to know what you all think and to verify that existing PSA.TO holders have nothing to worry about. Thanks!
Posted by Purpose Investments on Dec 29th, 2022

Purpose Investments Announces Additional Details for Merger of Purpose Money Market Fund into Purpose High Interest Savings ETF and Stock Split for Purpose US Cash Fund and Purpose Premium Money Market Fund

Purpose Investments Inc. (“Purpose”) previously announced on November 22, 2022, its proposal to merge Purpose Money Market Fund (“PMT”) into Purpose High Interest Savings ETF (to be renamed Purpose High Interest Savings Fund) (“PSA”) (the “Merger”) on or about January 27, 2023 (the “Effective Date”). As a result of the Merger, holders of Class A units and Class F units of Purpose Money Market Fund will become holders of Class A units and Class F units, respectively, of the Purpose High Interest Savings ETF on the Effective Date. The current holders of ETF units of the Purpose High Interest Savings ETF will not be affected in any way and will continue to hold ETF units of that fund.

The net asset value of the newly offered Class A units and Class F units of PSA will be set (and is expected to remain fixed) at $10.00 per unit from and after the Effective Date. Class A units and Class F units of PMT currently trade at above $50.00 and will therefore receive additional units of PSA upon merger. To achieve a fixed $10.00 net asset value, interest will be accrued and be reflected in the investor’s account through the record keeper and will be paid out on the distribution payment date. If the unitholder redeems his or her units prior to the distribution payment date, the accrued distribution will be paid out prior to the settlement of the redemption. Additionally, immediately prior to the Effective Date of the Merger, PMT will declare a distribution on its Class A units and Class F units, which will be payable in cash or in units, based on the election of the holder. Further, as the Merger will be implemented on a tax-deferred basis, the cost base per unit of the new Class A units and Class F units of PSA to such holders is expected to be higher than $10.00 fixed price of the PSA units such holder will receive on the Merger.

Purpose today also announced that effective on or about January 27, 2023, the outstanding Class A units, Class F units, and Class I units (the “Units”) and Series A shares, Series F shares, and Series XF shares (the “Shares”) of Purpose US Cash Fund and Purpose Premium Money Market Fund, respectively, will be split such that the number of Units of Purpose US Cash Fund and Shares of Purpose Premium Money Market Fund received after the split will reflect a ratio of the net asset value of such Units and Shares before the sub-division divided by $10.00.

Following the split, the net asset value of the Units of Purpose US Cash Fund and the Shares of Purpose Premium Money Market Fund is expected to be fixed at $10.00. To achieve a fixed $10.00 net asset value, interest will be accrued and be reflected in the investor’s account through the record keeper and will be paid out on the distribution payment date. If the unitholder redeems his or her units prior to the distribution payment date, the accrued distribution will be paid out prior to the settlement of the redemption. As the cost base will remain unchanged after the split, the cost base is expected to be higher than the $10.00 fixed price of the units following the split. The current holders of ETF units of the Purpose US Cash Fund will not be affected in any way and will continue to hold the same number of ETF units of the fund.
Source: https://www.purposeinvest.com/thoughtfu ... rpose-prem
Last edited by Kaplano on Jan 23rd, 2023 3:41 pm, edited 1 time in total.

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