Personal Finance

Which Saving Account/Bank

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  • Jul 16th, 2020 11:18 am
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[OP]
Sr. Member
Aug 15, 2018
722 posts
582 upvotes

Which Saving Account/Bank

Hi Everyone,

I am currently with TD for chequing and saving accounts. No particular problems but their saving account interest rate is really low.

I saw online some smaller banks offer circa 2% rate on saving accounts. On a few years period, it could make quite a big difference compared to savings with TD.

What would be a good strategy? Keep my salary come to TD and transfer savings to another bank with higher interests?

Not to use to organise my finance too well frankly. Appreciate any advice.

Thank you
33 replies
Member
User avatar
Dec 30, 2006
369 posts
160 upvotes
Toronto
I am in the same boat as you. I moved my savings to Manulife Advantage Saving account @2.5% max $50K for 1st 4 months. After that, I will move to EQ bank for 2.0% savings. I am slowly cancelling my accounts with TD and just leaving a checking with 5K in it and a LOC.
[OP]
Sr. Member
Aug 15, 2018
722 posts
582 upvotes
fakejordan wrote: I am in the same boat as you. I moved my savings to Manulife Advantage Saving account @2.5% max $50K for 1st 4 months. After that, I will move to EQ bank for 2.0% savings. I am slowly cancelling my accounts with TD and just leaving a checking with 5K in it and a LOC.
That makes sense. Do you have a TFSA too?

I'm thinking:
- Receive my salary on TD
- Contribute 6K a year to TFSA to take advantage of the tax free program (maybe TD?)
- Move savings to high interest saving account (definitely not TD)
Deal Addict
Mar 10, 2009
2719 posts
343 upvotes
Mississauga
Check out EQ bank currently at 2% interest.

If not check out the "high interest" post to see which online savings account that fits your needs the most along with the interest rates.

only hassle is transfering money back and forth when needed and needs a few days to go between.
[OP]
Sr. Member
Aug 15, 2018
722 posts
582 upvotes
win-star wrote: Check out EQ bank currently at 2% interest.

If not check out the "high interest" post to see which online savings account that fits your needs the most along with the interest rates.

only hassle is transfering money back and forth when needed and needs a few days to go between.
Thank you. Found out a friend of mine is with EQ and is happy with it. I will go this route for the saving accounts.

Now I'm trying to find out if opening a TFSA makes sense for someone who doesn't invest in stocks. What do you think?
Deal Addict
Mar 10, 2009
2719 posts
343 upvotes
Mississauga
mattnew wrote: Thank you. Found out a friend of mine is with EQ and is happy with it. I will go this route for the saving accounts.

Now I'm trying to find out if opening a TFSA makes sense for someone who doesn't invest in stocks. What do you think?
TFSA is more like "long-term" investments and don't have to pay taxes on the interest earned.

With TFSA, lets say as an example, you put in the total yearly limit/contribution of $30,000 and you need $5,000 to take out of the TFSA this year [2020], you can not put that $5,000 back until January 1, 2021 [on top of the 2021 yearly limit]

I can't explain it but that's the best I can do.
Member
User avatar
Dec 30, 2006
369 posts
160 upvotes
Toronto
mattnew wrote: That makes sense. Do you have a TFSA too?

I'm thinking:
- Receive my salary on TD
- Contribute 6K a year to TFSA to take advantage of the tax free program (maybe TD?)
- Move savings to high interest saving account (definitely not TD)
No TSFA. I'm still trying to understand TSFA. I had 20K in a TSFA with TD which generate only 90 cents monthly for me in interest. So I cancelled my TD TSFA and switch to Manulife's 2.5%.
[OP]
Sr. Member
Aug 15, 2018
722 posts
582 upvotes
fakejordan wrote: No TSFA. I'm still trying to understand TSFA. I had 20K in a TSFA with TD which generate only 90 cents monthly for me in interest. So I cancelled my TD TSFA and switch to Manulife's 2.5%.
Same here. From what iI understand, there are two types of TFSA:

- TFSA as a Saving Account: I contribute $6K a year and the interest I gain will be tax free. Only interesting if the interest rate is high (otherwise a high interest saving account serves a similar purpose).
- TFSA as an Investment Account: I buy financial products for $6K, put them in the TFSA and hopefully make profit. My profits will then be tax free. That's the best case scenario.
What I am more concerned about though and where I would like to have advice: what if my investments are bad and I actually lose money? Do I only lose the eventual profits I made before my investments turn bad - or do I also risk to lose the initial contributions of $6K? In the latter case, it seems quite risky to me.
Deal Addict
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Jan 16, 2007
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There aren't different types of TFSA. A TFSA is just a tax treatment by the Government. It means any money you earn from funds under that tax treatment aren't taxed. So if I contribute $50 into my TFSA into a savings account for example, then any interest earned isn't taxable. Same applies if I contribute $50 and buy some stocks that I then sell for a profit, that profit isn't taxed. They can be in a savings account, stocks, exchange traded funds, mutual funds. Being in a TFSA doesn't change the risks associated with it. If you invest in a stock and lose all your money, then the outcome is the same whether it is in a TFSA or not. That money is gone, along with the contribution room it used to put it into the TFSA.
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[OP]
Sr. Member
Aug 15, 2018
722 posts
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joshnet wrote: There aren't different types of TFSA. A TFSA is just a tax treatment by the Government. It means any money you earn from funds under that tax treatment aren't taxed. So if I contribute $50 into my TFSA into a savings account for example, then any interest earned isn't taxable. Same applies if I contribute $50 and buy some stocks that I then sell for a profit, that profit isn't taxed. They can be in a savings account, stocks, exchange traded funds, mutual funds. Being in a TFSA doesn't change the risks associated with it. If you invest in a stock and lose all your money, then the outcome is the same whether it is in a TFSA or not. That money is gone, along with the contribution room it used to put it into the TFSA.
Thank you for clarifying. So if someone isn't comfortable with financial investments and the TFSA interest rate isn't great, then it seems that it doesn't make much sense to open one.

I will search for TFSA options with high interest rates. That looks to be what I am looking for (same as high interest saving account, minus taxes on interests earned).
Deal Addict
User avatar
Jan 16, 2007
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What you are referring to is a TFSA High Interest Savings Account. There is another thread with a list official-rfd-thread-tax-free-savings-ac ... 09-681290/
Banking: Alterna Bank (2%), Motive Financial (3%)
Investing: National Bank Direct Brokerage
Spending: Scotia Amex Gold (6 pts/Sobeys, 5 pts/dining, 1 pts/rest), Scene Visa (1 pts)
Mobile: Eastlink 10GB Rollover ($45/mth)
Member
Nov 24, 2019
436 posts
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Saskatoon
What kind of timeframe are you looking at for your savings/investments? If you're looking for something to put money in for long term savings, then avoiding investments doesn't really make sense as being too risky. With savings accounts you're basically guaranteed to lose over time since most rates will not keep up with inflation. Meaning that in 10 or 15 years your money will actually have less buying power than it does today.

Investments inherently have "risk" yes, but a lot can be managed. You don't seem to have a great handle on investing, no offense, so somebody like you shouldn't be looking at buying individual stocks anyways. Something like an ETF or even bank mutual fund will be much safer, and almost always outperform savings accounts in the long run (they have long histories of doing that, and even with the COVID collapse in March you weren't anywhere near losing all your investment).
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Dec 28, 2010
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I never understood why someone would keep 5k in an account to prevent the cost of $120 / year. If you put $5,000 in a self-directed TFSA with Waterhouse you easily make 8% minimum on your $5000. TD Trust can open up a simple account which is even cheaper than $9.95. You can even transfer directly into RRSPs, TFSA's with Waterhouse.
.
[OP]
Sr. Member
Aug 15, 2018
722 posts
582 upvotes
SaskCanesFan wrote: What kind of timeframe are you looking at for your savings/investments? If you're looking for something to put money in for long term savings, then avoiding investments doesn't really make sense as being too risky. With savings accounts you're basically guaranteed to lose over time since most rates will not keep up with inflation. Meaning that in 10 or 15 years your money will actually have less buying power than it does today.

Investments inherently have "risk" yes, but a lot can be managed. You don't seem to have a great handle on investing, no offense, so somebody like you shouldn't be looking at buying individual stocks anyways. Something like an ETF or even bank mutual fund will be much safer, and almost always outperform savings accounts in the long run (they have long histories of doing that, and even with the COVID collapse in March you weren't anywhere near losing all your investment).
Thanks for the reply, no offense taken at all. It's the opposite, I appreciate you giving advices.

I agree that risk can be managed, however as you said I do not know much about how to invest. Which will probably result in me losing money anyway. So I will lose money in a saving account over time due to inflation, but I could lose more with investments. That's how I see things.
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Dec 28, 2010
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mattnew wrote: Thanks for the reply, no offense taken at all. It's the opposite, I appreciate you giving advices.

I agree that risk can be managed, however as you said I do not know much about how to invest. Which will probably result in me losing money anyway. So I will lose money in a saving account over time due to inflation, but I could lose more with investments. That's how I see things.
And that makes sense. I understand your concern. There are still other investment options like robo investors, a TFSA with Wealthsimple is painless and your money (in a TFSA) grows without your active involvement.
.
[OP]
Sr. Member
Aug 15, 2018
722 posts
582 upvotes
VESTEGAARD wrote: And that makes sense. I understand your concern. There are still other investment options like robo investors, a TFSA with Wealthsimple is painless and your money (in a TFSA) grows without your active involvement.
Thanks for taking the time to reply. I heard about Wealthsimple robo investors - but not sure how I can control if the investments they make are good or bad, given the fact my own knowledge on the topic is fairly thin.

I'm not looking for a magic solution to get guaranteed profits with no loss at all, just a bit concerned at the idea of having basically all the money in the account at risk.

I need to get more educated on the topic clearly.
Member
Jan 24, 2013
484 posts
449 upvotes
Rainy River
Motive Financial Savvy Savings Account 2.05% is good, if you just want to park some money for a while. EQ Bank works as well.
Deal Addict
Nov 6, 2015
1101 posts
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Guelph, ON
OP, sounds like your banking needs are very simple. Why not ditch TD and go with an online bank like Simplii or Tangerine? The amount you save in not paying fees (or alternatively, the amount you can make with the thousands in hostage money in the chequing account) may save you more than the interest you plan on getting in a HISA.
Sr. Member
Oct 27, 2012
555 posts
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retireyoung55 wrote: Motive Financial Savvy Savings Account 2.05% is good, if you just want to park some money for a while. EQ Bank works as well.
Their TFSA is also at 2.05%, which I believe is the highest TFSA rate right now. OP, if you're gonna park your money in a HISA anyway, it makes no sense to not put it in a TFSA first if you have the room. And unless you just turned 18 this year, you have more than $6,000 of contribution room. You could have as much as $69,500 in contribution room if you were 18 or more in 2009. So if you weren't 18 in 2009 then your headroom will be in between $6k and $69.5k (you'll have to figure that out).

Long story short, even if you don't plan on investing, it still makes sense to max out your TFSA before putting your money in a taxable HISA. Motive currently has a 2.05% TFSA.

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