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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Member
Sep 8, 2010
381 posts
123 upvotes
Chambly
ADenariusSaved wrote: 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 =/...
I agree TD really sux lately...I have kept things there because i have a 20 yr relationship, but have started moving over to BMO for my business only because of their no fee business banking plan. With TD, I always have to keep 20-30k to avoid the $2-0-30/month per account/business I have. I have a personal account at Scotia and NBC and Desjardins credit cards, but never tried their trading. I know they offer $0 trades, but as you said, I was just trying to avoid a nightmare in case something happened to me, or even just managing TFSA limits, etc

So for IBKR, I know they pay 3.83% on idle USD cash and 3.66% on CAD. If I buy some HSUV.U can I get in and out like trading a regular stock or do I have to keep a certain number of time not to lose the interest?

Is buying HSUV.U through IBKR, much more risky, in case of a world crisis, as opposed to keeping idle cash in IBKR or a buying through a big Bank?
Jr. Member
Feb 1, 2014
173 posts
104 upvotes
To follow up on my prior post, specifically, this is the part that I'm not sure that I understand completely:
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.
If I'm understanding this correctly, PMT shares will be converted to Class A and Class F shares of PSA, and PSA shares of these classes will have a floor market value of $10.00?

What class are the existing shares of PSA?

And will the existing shares of PSA continue to have a floor market value of $50.00? It seems that the answer is yes, but I'm wondering what you all think.
Deal Addict
Jul 11, 2009
1079 posts
864 upvotes
Calgary
Along the lines of the previous question - re: PSA EFT, is there any benefit from waiting until after the Class A and Class F redistribution to put money into PSA? I was hoping there won't be any impacts to capital gains/losses or book/market values after this change. Could complicate next year's tax filing if so.
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[OP]
Deal Addict
User avatar
Jan 11, 2020
3966 posts
3268 upvotes
Torontois @ 宇宙中心
mcu wrote: I agree TD really sux lately...I have kept things there because i have a 20 yr relationship, but have started moving over to BMO for my business only because of their no fee business banking plan. With TD, I always have to keep 20-30k to avoid the $2-0-30/month per account/business I have. I have a personal account at Scotia and NBC and Desjardins credit cards, but never tried their trading. I know they offer $0 trades, but as you said, I was just trying to avoid a nightmare in case something happened to me, or even just managing TFSA limits, etc

So for IBKR, I know they pay 3.83% on idle USD cash and 3.66% on CAD. If I buy some HSUV.U can I get in and out like trading a regular stock or do I have to keep a certain number of time not to lose the interest?

Is buying HSUV.U through IBKR, much more risky, in case of a world crisis, as opposed to keeping idle cash in IBKR or a buying through a big Bank?
Product sheet: horizonsetfs.com/wp-content/product-sheets/EN/HSUV-Product-Sheet.pdf?ver=1674541019
Key Features of HSUV.U:
• Enhanced Savings Potential: HSUV.U invests substantially all of its assets in
high- interest U.S. dollar deposit accounts with one or more Canadian chartered
banks, which provide a higher interest rate than a traditional savings account with
no minimum holding periods

• Daily Liquidity: HSUV.U is an ETF, so it can be purchased or sold any time throughout
the trading day. This is a key advantage versus other high interest savings vehicles,
which typically have minimum holding periods or investment amounts

• Tax Efficiency: HSUV.U is not expected to make taxable distributions, which should
enhance the after-tax performance of HSUV.U versus other cash savings vehicles
• Continuous Reinvestment: Net interest income from the high interest savings
accounts are reflected in HSUV.U’s NAV daily
Although HSUV.U primarily invests in bank deposit accounts, HSUV.U is not covered by the Canada Deposit Insurance Corporation,
Federal Deposit Insurance Corporation or any other government deposit insurer.
So you don't have a minimum hold time, the interest will be baked into the NAV, whether the market value reflects this is anyone's guess, market values are pseudo-random.

IBKR is protected by CIPF I'd imagine, but these ETFs are not protected by CDIC.

https://ibkr.info/article/3420
How is my IB Canada account protected?
The Canadian Investor Protection Fund (CIPF) is sponsored by the Canadian regulator (IIROC) to ensure client assets held by a Canadian investment dealer are protected if a member firm becomes insolvent. IB Canada is a member of the CIPF which offers insurance against member default for amounts up to CAD 1,000,000. Covered assets include cash, securities and commodities and will depend on the account type:

Non-registered accounts (Cash, Margin, TFSA)

1,000,000 CAD for any combination of cash, securities and commodities under all non-registered account types.

For assets held in a joint account or under a corporation, the percentage interest is added towards the same total.

Registered account (RSP)

RSP accounts are treated as "Separate Account" and are eligible for an additional 1,000,000 CAD coverage. Additional details can be found on www.cipf.ca.

Please note, IB Canada accounts receive CIPF protection in lieu of SIPC protection.
Member
User avatar
Feb 12, 2016
263 posts
150 upvotes
Purpose and CI Financial declared distributions a week ago. Anyone know why Horizon's has not...I want to know how much distribution CASH.TO will pay this month? Any idea when they will publish them or if they have and I cant find it?
Deal Addict
May 13, 2005
4014 posts
4038 upvotes
Montreal
dealhawk1 wrote: Purpose and CI Financial declared distributions a week ago. Anyone know why Horizon's has not...I want to know how much distribution CASH.TO will pay this month? Any idea when they will publish them or if they have and I cant find it?
Bank of Canada will announce interest rate change tomorrow Jan 25.
https://www.bankofcanada.ca/2023/01/fad ... y-25-2023/

Purpose and CI Financial declared distributions earlier as they have ex-dividend date around Jan 25 to void dealing with BoC interest rate change.
https://forums.redflagdeals.com/high-in ... #p37175351

For CASH, I think they might wait until tomorrow Jan 25 to see if they need to adjust the distribution as we already able to calculate the distribution (0.19375) based on the projected interest rate for Jan 2023 (4.65% if Boc not changing the interest rate tomorrow).
https://forums.redflagdeals.com/high-in ... #p37140228
Member
User avatar
Feb 12, 2016
263 posts
150 upvotes
X360 you are a machine. Good work. Which one of these ETFs do you own?
Deal Addict
May 13, 2005
4014 posts
4038 upvotes
Montreal
dealhawk1 wrote: X360 you are a machine. Good work. Which one of these ETFs do you own?
For registered account, I buy CASH as it gives the better interest rate compared to other funds and I don't bother the CIDC.

For non-registered, before I used to buy/sell HSAV, now I buy/sell CASH.
[OP]
Deal Addict
User avatar
Jan 11, 2020
3966 posts
3268 upvotes
Torontois @ 宇宙中心
Kaplano wrote: To follow up on my prior post, specifically, this is the part that I'm not sure that I understand completely:
If I'm understanding this correctly, PMT shares will be converted to Class A and Class F shares of PSA, and PSA shares of these classes will have a floor market value of $10.00?

What class are the existing shares of PSA?

And will the existing shares of PSA continue to have a floor market value of $50.00? It seems that the answer is yes, but I'm wondering what you all think.
nicoco3000 wrote: I read this in french too ( https://www.purposeinvest.com/fr-CA/thoughtful/dfs ) and i still have a headache Grinning Face With Smiling Eyes
X360 wrote: For registered account, I buy CASH as it gives the better interest rate compared to other funds and I don't bother the CIDC.

For non-registered, before I used to buy/sell HSAV, now I buy/sell CASH.
You don't like HSAV? Premiums too much?

Today is a Fed day, like opening Christmas presents! (if no mortgage)
Deal Addict
May 13, 2005
4014 posts
4038 upvotes
Montreal
ADenariusSaved wrote: You don't like HSAV? Premiums too much?
Premium doesn't matter for me if I keep it long term. However, I like park cash money short term and easy buy/sell CASH ETFs as we kinda able to predict what will be the price of these CASH ETFs next day.
Member
User avatar
Feb 12, 2016
263 posts
150 upvotes
X360 wrote: Premium doesn't matter for me if I keep it long term. However, I like park cash money short term and easy buy/sell CASH ETFs as we kinda able to predict what will be the price of these CASH ETFs next day.
What price will u sell CASH for this month? What price will you buy it for again? Keep us up to date on your process.
Deal Addict
May 13, 2005
4014 posts
4038 upvotes
Montreal
dealhawk1 wrote: What price will u sell CASH for this month? What price will you buy it for again? Keep us up to date on your process.
It is very easy as we know exactly the price we should buy/sell.
You could see that we could predict earlier that the CSAV price will be $50.21 on Jan 24 and will reset back to $50 tomorrow on ex-dividend date Jan 25.
https://forums.redflagdeals.com/high-in ... #p37177995

Basically, wait for fund company announces the distribution for the current month and the ex-dividend date.
+ One day before ex-dividend date, sell at price = $50 + distribution (or minus one cent if you can't sell it at distribution price)
+ On the ex-dividend date, buy at price = $50 (or plus one cent if you can't buy it at $50).

Note: if the ex-dividend date is one day before or after the weekend / holidays break then we have to readjust the price as it will increase few cents for those days.
Deal Addict
May 13, 2005
4014 posts
4038 upvotes
Montreal
Horizons not wait for BoC interest change on Jan 25 and announce the distribution for Jan 2023 few hours ago.
The ex-dividend date for the Distribution for CASH is anticipated to be January 31, 2023
distribution = $0.20184 (4.83%)
https://www.newswire.ca/news-releases/h ... 09960.html
Member
User avatar
Feb 12, 2016
263 posts
150 upvotes
X360 wrote: It is very easy as we know exactly the price we should buy/sell.
You could see that we could predict earlier that the CSAV price will be $50.21 on Jan 24 and will reset back to $50 tomorrow on ex-dividend date Jan 25.
https://forums.redflagdeals.com/high-in ... #p37177995

Basically, wait for fund company announces the distribution for the current month and the ex-dividend date.
+ One day before ex-dividend date, sell at price = $50 + distribution (or minus one cent if you can't sell it at distribution price)
+ On the ex-dividend date, buy at price = $50 (or plus one cent if you can't buy it at $50).

Note: if the ex-dividend date is one day before or after the weekend / holidays break then we have to readjust the price as it will increase few cents for those days.
I always get it for $50.01 never $50. I thought it was because of wealthsimple. Thanks for the breakdown and also for the CASH.TO distribution update. You are my hero.
Deal Addict
Jan 31, 2007
4968 posts
5084 upvotes
Richmond Hill
Difficult decision on buying CASH vs ISA like DYN6000.
******************************************************
Bright side of RFD: Often find good deal
Dark side of RFD: Tons of stuff that I don't need but still got them because of RFD
******************************************************
Jr. Member
User avatar
Jun 4, 2007
104 posts
102 upvotes
Longueuil
dealhawk1 wrote: I always get it for $50.01 never $50. I thought it was because of wealthsimple. Thanks for the breakdown and also for the CASH.TO distribution update. You are my hero.
I find that in october and november it was easier to sell or buy within one cent. Now that CASH has doubled in volume there is too often a 3 cents spread vs nav. PSA is not better.
Deal Addict
May 3, 2008
2700 posts
1758 upvotes
Markham
nicoco3000 wrote: I find that in october and november it was easier to sell or buy within one cent. Now that CASH has doubled in volume there is too often a 3 cents spread vs nav. PSA is not better.
prob cuz there is significantly more demand given the hikes in rates. So more slippage and have to cross bid/offer to get things done.
Deal Addict
May 13, 2005
4014 posts
4038 upvotes
Montreal
nicoco3000 wrote: I find that in october and november it was easier to sell or buy within one cent. Now that CASH has doubled in volume there is too often a 3 cents spread vs nav. PSA is not better.
Usually, these CASH ETFs price are very closed to the NAV.
When you see 3 cents spread vs NAV then probably you see it on Friday before the weekend as the price expected to have few more cents accounted for Saturday, Sunday 2 days interest.

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