Personal Finance

RBC MoneyMarket & TFSA

  • Last Updated:
  • Aug 14th, 2019 7:27 pm
Tags:
[OP]
Newbie
Aug 8, 2017
40 posts
13 upvotes

RBC MoneyMarket & TFSA

Alright, this is something I should have been trying to focus on years ago, so time to finally get cracking.

I believe I have been doing things stupid, as I have not yet taken advantage of TFSA. This should give me a limit of up to 60K+ of room. I have about double that in the RBC MoneyMarket.

So, I should at least see if they can roll half of that into the TFSA, does this make sense? I am wondering if there would be a reason not to, such as being forced to sell items, and fees?

While I am probably going to be told to go ask my financial advisor about this, I do plan on it, the thing is I know that they act on their own interest (and that of RBC) first. Thought I'd check with the experienced pros here to see what I should 'look out for'.

This should be a simple process, right?
4 replies
Deal Addict
User avatar
Mar 25, 2012
1866 posts
1056 upvotes
Kelowna
InvalidName wrote: Alright, this is something I should have been trying to focus on years ago, so time to finally get cracking.

I believe I have been doing things stupid, as I have not yet taken advantage of TFSA. This should give me a limit of up to 60K+ of room. I have about double that in the RBC MoneyMarket.

So, I should at least see if they can roll half of that into the TFSA, does this make sense? I am wondering if there would be a reason not to, such as being forced to sell items, and fees?

While I am probably going to be told to go ask my financial advisor about this, I do plan on it, the thing is I know that they act on their own interest (and that of RBC) first. Thought I'd check with the experienced pros here to see what I should 'look out for'.

This should be a simple process, right?
If you've not previously contributed to a TFSA, you have about $66,000 in unused contribution from the current year (2019) and the preceding years going back to 2009 (it increased to $6,000 this year and, under the Conservatives, we had a year or two of $10,000 contribution limits). If you want to park money in a self-directed discount brokerage TFSA, a money market fund from any particular mutual fund dealer is fine, but the returns are not especially significant (i.e., sub 1%).

I would probably recommend parking funds in your brokerage's high interest savings account (has a mutual fund ticker because it "trades," at the end of the trading day, through FundSERV), in an ETF like PSA or CSAV from each of Purpose Investments or CI First Asset ETFs that invests funds in bank and credit union demand and term deposit accounts yielding 2-2.30% per annum. You could also go with HFR, a floating rate, very short term money market-like ETF that trades close to a constant NAV of about $10 per unit, or in the Accumulating Units of ZST (believe it's ZST.A, ZST.L, or ZST.U), the BMO Ultra Short Term Fixed Income ETF whereby instead of you being paid distributions each month, they accrue to the NAV of the series of the ETF to which you're invested.

Cheers,
Doug
Deal Addict
Jan 21, 2018
4845 posts
4908 upvotes
Vancouver
Many savings/money-market funds are set up to always have the same unit value (e.g, $10/share), so there is never any capital gain/loss associated with selling them - you receive the payouts as interest and get taxed on it in the same year.
Deal Addict
User avatar
Mar 25, 2012
1866 posts
1056 upvotes
Kelowna
Scote64 wrote: Many savings/money-market funds are set up to always have the same unit value (e.g, $10/share), so there is never any capital gain/loss associated with selling them - you receive the payouts as interest and get taxed on it in the same year.
Yes, that's true, @Scote64, but an important disclosure: there can be no assurances that the money market fund will maintain a consistent NAVPU.

Cheers,
Doug
[OP]
Newbie
Aug 8, 2017
40 posts
13 upvotes
It seems I may have to spend the rest of the month doing a little more digging into my options here. From what I've been hearing a lot, the market is going to fall in the near future, and it's best to just sit on money. I had been thinking now of just cashing everything out, and then putting it into a high-interest savings account. Then it would be liquid to snap up any under-valued stock after a fall.

The one thing that really sucks with this, is RBC pays only 1% for its HIGH INTEREST saving account. Ahah. So I'd be just losing money this way as it doesn't even beat inflation...

Top