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Is there anywhere safe to invest money for a short period of time

  • Last Updated:
  • Dec 24th, 2020 6:26 pm
[OP]
Deal Addict
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Nov 2, 2020
1280 posts
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Is there anywhere safe to invest money for a short period of time

Hi Everyone,
Its my first post to this section so please forgive me if I make any mistakes! I don't understand finance whatsoever and have not made the wisest decision - basically for years have let money sit doing nothing.

So here it goes. I have about 65k in a mutual fund account under TFSA so its tax free, I have 11k in RRSP
I have another 100k essentially sitting in chequing and savings accounts doing nothing

I will be receiving about 200k from refinancing my mortgage - I hope to buy a new property but not sure when as so many terminations have happened and I am sort of waiting for something good to come up!

My condo's montage is 186k - was paying 1063 montage and 300 maintenance fees. My mortgage will now be 1399 as I refinanced! I went through with the refinance as I thought I was going to buy a property but never ended up happening but still thought I should get the money now as I would like to buy within the next year.I have no debt, no car payments, nothing other than my mortgage payment, maintenance fee, and property tax payment

The problem is I could find a desirable place in a week or a few months. Not sure what I should do that is safe with my money while it sits in the bank. Also is going to a bank financial advisor the right thing to do? Or is there just some sort of account that I could put it in that would at least be better than checking and savings.

I appreciate any feedback and assistance. Thank-you
37 replies
Deal Addict
Nov 9, 2013
4025 posts
3846 upvotes
Edmonton, AB
Basically, you're not going to find what you're looking for. If you want to preserve your balance and have high liquidity, you're basically going to earn zero return.

The safest option is already what you are doing.
Keep calm and go long
Deal Fanatic
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Sep 21, 2007
7138 posts
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Winnipeg
HISA... high interest savings account. You KNOW you need that money easily accessible. Do NOT risk putting into anything else. Don't be greedy and stick to safe investments.
"An essential aspect of creativity is not being afraid to fail." -- Edward Land
Deal Addict
User avatar
Aug 4, 2014
3366 posts
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Toronto, ON
HISAs at alternative lenders for higher rates.
But there’s another consideration here – the interest rate you’re getting from your bank. Big banks pay close to zero right now, whereas alternative banks paid as much as 1 per cent to 1.8 per cent as of mid-December. With proceeds of, let’s say, $500,000 from the sale of a home, 1.5-per-cent interest gets you $7,500 a year before taxes.

There are enough CDIC-member alternative banks with competitive rates to absorb the multiple deposits of $100,000 or so that would be generated by the sale of an average-price home. The inconvenience of managing these accounts is the price you pay for better rates and confidence that the risk of dealing with smaller financial institutions has been contained.
Where to stash cash when selling a home
Member
Jun 15, 2015
424 posts
457 upvotes
Thornhill, ON
Others have mentioned HISA. Check Canadian Tire bank. They offer 1.8% interest paid monthly.
Deal Fanatic
Jul 30, 2003
5778 posts
548 upvotes
Toronto
freilona wrote: HISAs at alternative lenders for higher rates.



Where to stash cash when selling a home
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Where to stash cash when selling a home. Plus, David Rosenberg and BlackRock’s top strategist for Canada on how to invest in 2021
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The coverage limits imposed by Canada Deposit Insurance Corp. never look so skimpy as when you’ve sold a house and need safe parking for the proceeds.

CDIC covers up to $100,000 in principal and interest in each of seven account categories, including deposits held in one name, in joint accounts and in a tax-free savings account. With a $603,344 national average resale house price nationally in November, it’s quite likely that someone who sells a house and wants to put the money in savings will not get CDIC protection for the entire amount at one bank.

A reader recently wondered about this balance of risk in exceeding CDIC limits and convenience of having money in one bank account. “How concerned should I be that CDIC only insures up to $100,000?” he asked. “I recently sold my house and want to put the proceeds in a high interest savings account, but I’d rather not have to open a separate account at a different institution for each $100,000.”

The risk of losing money in a savings account because a Big Six bank collapsed is very small, but not zero. It’s a personal judgment call whether the safety of dividing up the money into chunks and parcelling them out to separate banks is worth the effort.

But there’s another consideration here – the interest rate you’re getting from your bank. Big banks pay close to zero right now, whereas alternative banks paid as much as 1 per cent to 1.8 per cent as of mid-December. With proceeds of, let’s say, $500,000 from the sale of a home, 1.5-per-cent interest gets you $7,500 a year before taxes.

There are enough CDIC-member alternative banks with competitive rates to absorb the multiple deposits of $100,000 or so that would be generated by the sale of an average-price home. The inconvenience of managing these accounts is the price you pay for better rates and confidence that the risk of dealing with smaller financial institutions has been contained.

The reader who asked where to put the proceeds for a home sale is a resident of Ontario, where credit union deposits are insured for up to $250,000 by the Deposit Insurance Corp. of Ontario. There’s unlimited coverage in registered accounts, including TFSAs.

In other provinces, notably Manitoba (home to several online banks owned by credit unions), there is no limit on deposit insurance coverage. Read my take on how this Manitoba coverage compares with CDIC, online at tgam.ca/carrick-DGCM.

A question for home sellers: Would it bother you to park half-a-million dollars or more with a big bank and get next to no interest while it lends the money out for a much higher rate? Thought so. That’s why the preferred approach for home sellers who want to stash cash safely is to suck it up and use a bunch of alternative banks. It’s worth the effort to get deposit insurance and a better rate.

-- Rob Carrick, personal finance columnist

This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.

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Question: I will be contributing $6,000 to my TFSA in early January. If I borrow to make my contribution, is the interest on the loan tax-deductible? If not, should I purchase $6,000 worth of stock in my non-registered account, using my line of credit, then transfer the stock in kind into my TFSA?

Answer: If you borrow money to invest in a TFSA or other registered account, the interest is not tax-deductible. If you borrow to invest in a non-registered account, the interest is deductible (as long as the investment generates income or there is a reasonable expectation that it will do so in the future). However, interest would cease to be deductible once you transfer the shares to your TFSA.

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I post DAILY HOUSING SUPPLY:
  • Whatsapp / FB / WWW / ...
IMO Supply is the only metric that matters in GTA housing market!
Deal Fanatic
Jul 30, 2003
5778 posts
548 upvotes
Toronto
atom2020 wrote: Hi Everyone,
Its my first post to this section so please forgive me if I make any mistakes! I don't understand finance whatsoever and have not made the wisest decision - basically for years have let money sit doing nothing.

So here it goes. I have about 65k in a mutual fund account under TFSA so its tax free, I have 11k in RRSP
I have another 100k essentially sitting in chequing and savings accounts doing nothing

I will be receiving about 200k from refinancing my mortgage - I hope to buy a new property but not sure when as so many terminations have happened and I am sort of waiting for something good to come up!

My condo's montage is 186k - was paying 1063 montage and 300 maintenance fees. My mortgage will now be 1399 as I refinanced! I went through with the refinance as I thought I was going to buy a property but never ended up happening but still thought I should get the money now as I would like to buy within the next year.I have no debt, no car payments, nothing other than my mortgage payment, maintenance fee, and property tax payment

The problem is I could find a desirable place in a week or a few months. Not sure what I should do that is safe with my money while it sits in the bank. Also is going to a bank financial advisor the right thing to do? Or is there just some sort of account that I could put it in that would at least be better than checking and savings.

I appreciate any feedback and assistance. Thank-you
Take your time - Learn and have proper plan. What will you do in each situation that may / may not work your way.

If I were you - I will invest in positive cash-flow properties (provided you are ok being a landlord. Its not hard, but it is time consuming). Make sure you have a good team, to guide you. Let me know if you need help.
I post DAILY HOUSING SUPPLY:
  • Whatsapp / FB / WWW / ...
IMO Supply is the only metric that matters in GTA housing market!
Deal Fanatic
Apr 5, 2016
5177 posts
3685 upvotes
Calgary/Vancouver
If you have a good relationship with an bank advisor or financial planner, they have redeemable short term certificates you can get for higher interest rates.
Deal Addict
User avatar
Aug 4, 2014
3366 posts
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Toronto, ON
PrinceMS wrote: Not everyone has access:
It’s against forum rules to post entire articles. Anyone can read the articles behind paywall in getpocket (free sign up :))
[OP]
Deal Addict
User avatar
Nov 2, 2020
1280 posts
1737 upvotes
PrinceMS wrote: Take your time - Learn and have proper plan. What will you do in each situation that may / may not work your way.

If I were you - I will invest in positive cash-flow properties (provided you are ok being a landlord. Its not hard, but it is time consuming). Make sure you have a good team, to guide you. Let me know if you need help.
Thank-you I am taking time to learn to be a landlord! I do have a lot of patience naturally but really have to understand tenant rights and the law around it in Ontario. I hope to rent my condo out once I find a new property but right now the market is not so good here for rentals in condos
[OP]
Deal Addict
User avatar
Nov 2, 2020
1280 posts
1737 upvotes
porticoman2 wrote: OP, if you have liquid cash with no immediate plans to buy something, why not use it to max out your TFSA & RRSP

safe money investments with immediate liquidity are basically zero at ~1.25% & I believe will continue for the next 5 years

there are 3 - 6 mth promo's if you are looking to keep switching

https://www.ratehub.ca/savings-accounts ... h-interest

you refinanced therefore your debt load increased
Yes now part of me is regretting the re finance because I thought I was going to get a property faster. I did actually have an offer on one but the status certificate on the townhouse had issues so now sort of at square one. That being said I could end up finding a property in the next month - but it seems these are quiet months for real estate in terms of less listings Thank-you I appreciate this and will look at the promos!
[OP]
Deal Addict
User avatar
Nov 2, 2020
1280 posts
1737 upvotes
faken wrote: HISA... high interest savings account. You KNOW you need that money easily accessible. Do NOT risk putting into anything else. Don't be greedy and stick to safe investments.
Absolutely I need to be safe, I don't want to screw myself over as I have very little knowledge in this area!
Member
Apr 14, 2006
410 posts
266 upvotes
freilona wrote: It’s against forum rules to post entire articles. Anyone can read the articles behind paywall in getpocket (free sign up :))
Thanks but no thanks.

It's also against the rules spamming or shilling for freemium apps like getpocket.
Deal Addict
User avatar
Aug 4, 2014
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cal653 wrote: Thanks but no thanks.

It's also against the rules spamming or shilling for freemium apps like getpocket.
Get the subscription then if you must read the whole thing - there was nothing special in that article, sorry I quoted it, everybody says “HISA” regardless :)
Deal Fanatic
Aug 17, 2008
5249 posts
4651 upvotes
cal653 wrote: Thanks but no thanks.

It's also against the rules spamming or shilling for freemium apps like getpocket.
I am also against those on RFD that need to be paid to read a news article. All the while moving their lips as it's too taxing on their brain.

However, any regular Investing forum contributor will know that @freilona doesn't "shill." If anything she has shown considerable restraint in not calling out people who are too lazy or stupid to use a simple Google search.

Back to the regular programming.
"Two Harvard finance profs are walking. One looks down & sees a $20 bill. He says to the other, "Look! There's a $20 bill!" The other prof says, "Impossible. In an efficient mkt it would've already been found."
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Sep 21, 2007
7138 posts
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Winnipeg
MrMom wrote: I am also against those on RFD that need to be paid to read a news article. All the while moving their lips as it's too taxing on their brain.

However, any regular Investing forum contributor will know that @freilona doesn't "shill." If anything she has shown considerable restraint in not calling out people who are too lazy or stupid to use a simple Google search.

Back to the regular programming.
to add.. if it's hit the news articles already.. it's already too late to get in on something lol.
"An essential aspect of creativity is not being afraid to fail." -- Edward Land
Member
Jun 2, 2020
483 posts
438 upvotes
V5y1v1
+1 for canadian bonds, you could go with a short term bond index fund like ZST, ZCS or XSH for a percent or two more than most HISAs. Max your TFSA while you wait.
Sr. Member
Jul 25, 2010
601 posts
456 upvotes
Vancouver
I'm no expert but it does feel like short term bonds are the most ideal place to park cash for anywhere from 3-12 months at a time, basically beating small-name bank interest rates if only by 1-2%.
Deal Addict
Apr 10, 2017
1562 posts
734 upvotes
If this was me personally, like someone said, max out my TFSA and RRSP. Get those in line, worry about playing the game later.

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