Personal Finance

What to do with $30,000 in my chequing account?

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  • Jul 27th, 2015 10:01 pm
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Newbie
Jun 7, 2015
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What to do with $30,000 in my chequing account?

I have around $30,000 in my chequing account..What to do with it? Transfer to Tangerine to get some interest?
Purchased some funds earlier this year and now -6%. So I prefer some safer options...
New immigrant... don't have much knowledge on Canadian financial stuff...
26 replies
Deal Expert
Aug 22, 2011
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TFSA, RRSP, RESP (if applicable)...
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Aug 2, 2001
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Risk free options are things like GICs and High Interest Savings Accounts. I would personally keep the funds somewhere safe until you have decided what your goals are for the money, and then invest appropriately (based on risk, timeframe, etc.). Your bank may have promotional rates on their GICs as well if you look.

There are many new promotions for signing up for accounts through the typical HISA places (tangerine, etc.). Look through the Hot Deals forum, as well see if there are any signup bonuses on great canadian rebates website. Your bank probably also has a HISA, with a lower interest rate, but the advantage is you can very easily move money around your accounts with no delay (transferring to another institution takes time).

(HISA = High Interest Savings Account)
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Mar 24, 2008
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Before investing, save 3-6 months of your living expenses in an emergency fund.
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Deal Addict
Jul 29, 2006
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Well first start off by deciding what it's intended use is for and when you think you will need it.
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Dec 19, 2011
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If you have a fairly secure job (if there is such a thing) I suggest keep 3 months expenses in a TFSA earning low-interest, but at least some interest. If you can leverage your balance in order to pay zero fees, then do it. Fees will cost you more than you could make back in interest.

What ever extra you aren't saving for a specific purpose you should invest in a low-cost index fund RRSP. You can build these yourself using TD E-Series for example.

Next, look at why you amassed that amount of cash and plan to use ongoing cash flow to regularly contribute to that RRSP. When you contribute small, regular amounts in to an Index fund, you dollar-cost average your purchase price and over the long term don't need to worry about those -6% times. Markets are volatile but don't be afraid, as you can mitigate your risk without being a pro. :)
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Mar 8, 2013
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Are you the kind of person that wants to learn about financial issues or wants someone else to take care of them? You really can't go wrong in the short term by putting the maximum into a TFSA. Your maximum depends on when you came to Canada. Although there are many investment options in a TFSA, start with a savings account until you are more knowledgable or have a financial advisor. There is a thread here on TFSA Savings Accounts.
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Nov 2, 2013
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Funds should go back up , have some patience. If you are really worried about their volatility don't think there are too many other options aside from fixed income.
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Jun 10, 2008
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nx6288 wrote: Well first start off by deciding what it's intended use is for and when you think you will need it.
+1
Member
Dec 8, 2006
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Difficult to provide advice without knowing more about your financial situation. Do you have any debt? What are you saving towards? Will you need the cash in the near future?
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FirstGear wrote: Funds should go back up , have some patience. If you are really worried about their volatility don't think there are too many other options aside from fixed income.
Agreed. In fact, chances are you should buy more of the ones that dropped the most. For example, Bank Preferred shares are on sale right now. AND also, if you're going to invest, invest in ETFs and given your experience in it, pay someone to manage it for you. You could follow the Canadian Couch Potato series if you want to DIY.

Also, RRSPs are a waste unless you have quite high income. MAX your TFSA first! Losing 6% doesn't sound that bad. You haven't lost until you sell. It depends on what you buy, but if you're in a balanced portfolio you should see slow but steady growth YOY.

GICs and HISA are "safer" but you are losing $ as they have been going up slower than the price of cabbage and carrots!

Last of all, any portfolio should be weighted more heavily in US equities. Canadian equities are likely in for a long decline due to the economy, consumer debt, and the drop in the interest rate.
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Mar 24, 2008
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atomiton wrote: ...
Last of all, any portfolio should be weighted more heavily in US equities. Canadian equities are likely in for a long decline due to the economy, consumer debt, and the drop in the interest rate.
How can you be so sure? A more prudent approach is to hold US, Canadian and International equities. BTW, generally speaking, when interest rates drop, stocks prices go up and not down (since companies can borrow for cheap).
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Sep 21, 2007
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Liechstein wrote: I have around $30,000 in my chequing account..What to do with it? Transfer to Tangerine to get some interest?
Purchased some funds earlier this year and now -6%. So I prefer some safer options...
New immigrant... don't have much knowledge on Canadian financial stuff...
Lend it to me, I'll pay you 3% interest per year :)
Please use "Reply with Quote" when replying back to my PMs.
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Mar 8, 2013
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nickscott wrote: If you have a fairly secure job (if there is such a thing) I suggest keep 3 months expenses in a TFSA earning low-interest, but at least some interest. If you can leverage your balance in order to pay zero fees, then do it. Fees will cost you more than you could make back in interest.

What ever extra you aren't saving for a specific purpose you should invest in a low-cost index fund RRSP. You can build these yourself using TD E-Series for example.

Next, look at why you amassed that amount of cash and plan to use ongoing cash flow to regularly contribute to that RRSP. When you contribute small, regular amounts in to an Index fund, you dollar-cost average your purchase price and over the long term don't need to worry about those -6% times. Markets are volatile but don't be afraid, as you can mitigate your risk without being a pro. :)
I agree in general but if a new immigrant, how can s/he have RRSP contribution room since it is based on previous year's earned income?
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Nov 2, 2013
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akaManny wrote: Are you the kind of person that wants to learn about financial issues or wants someone else to take care of them? You really can't go wrong in the short term by putting the maximum into a TFSA. Your maximum depends on when you came to Canada. Although there are many investment options in a TFSA, start with a savings account until you are more knowledgable or have a financial advisor. There is a thread here on TFSA Savings Accounts.
Yeah that's what I did. An easy way to get started is to just buy some ETFs or a few blue-chip stocks out of your TFSA. There's a bunch of them so pick your taste. Canadian Couch Potato website gives a good rundown. Regarding the OP's comment about knowing little, doing the above is very simple. Don't need to be a genius.
MarcusXP wrote: Lend it to me, I'll pay you 3% interest per year :)
Says the same for many companies- so another option again is to buy their fixed income and hold until maturity.
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Sep 30, 2008
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If you don't have plans for it in the near term (3-6mths).

Max out TFSA (Consider buying some low risk mutual funds)
Add anything remaining to RRSP
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ksgill wrote: How can you be so sure? A more prudent approach is to hold US, Canadian and International equities. BTW, generally speaking, when interest rates drop, stocks prices go up and not down (since companies can borrow for cheap).
Nothing is ever sure... but the US economy is firing on all cylinders and the CAD$ dropping further will raise inflation in Canada. The Fed has all but promised to raise interest in the US in the fall further exacerbating the divide between Canada and the US and putting more downward pressure on the Loonie. Canadian RE is highly overvalued, especially in the largest cities ( 80% of Canadians live in Urban areas ) raising consumer debt and reducing personal liquidity across the nation. Oil has tanked and there is no raise in sight for it as Shale Fracking has meant our biggest buyer doesn't need our expensive to produce oil. The Chinese economy is unstable and trying to avoid a bubble collapse ( thought it's still up YTD, just not making the pace it was before ).

I wouldn't hold ALL US assets, but I'd still more heavily weight any portfolio in US equities. Since the GFC and the US holding banks responsible for bad mortgages ( as opposed to protecting them like Canada ) and the subsequent real-estate crash of 2009, people have paid OFF debt, learned their lesson and have more money to spend on things. Not many economists see the Loonie going above 90¢ any time soon. So, investing in steady US growth is a hedge against a declining dollar.

Side Point: If you bought $30,000 shares of AAPL in Jan 2009 after the GFC, it would be worth $300,000 USD ( $372,000 CAD ) today. I wish I had bought more.
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Jul 13, 2014
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Even a measly 1% savings account will do more for you than a chequeing account.

You're losing to inflation. Your BEST option would be to lock it into a GIC if you're not the risk taker, or invest in mutual funds or ETFs if you are.
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Oct 7, 2007
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If it were me I would invest the full $30k in the most liquid, highest interest savings account that offers either CDIC or provincial deposit insurance. Hubert is currently offering 1.9% in their savings account and if you can handle it, you can earn 2.05% on a 1-year GIC with the ability to cash out after 90d intervals with full interest accrued to-date (interest earned in a ladder fashion).

However, many people are not as risk-averse as me so if you must invest some or all, I would suggest splitting your $30k into chunks (e.g. 3 x $10k) and then investing accordingly. For example, you could leave 10k in your existing -6 investment, invest $10k in a high-interest savings product and the other $10k in blue chip stocks. However, I am not investment-smart so you most likely won't get rich with my plan, just minimize potential losses.

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