Investing

what's the best way to handle the cash in the investment account?

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  • Jul 31st, 2019 3:54 pm
Deal Addict
Mar 7, 2008
1035 posts
349 upvotes

what's the best way to handle the cash in the investment account?

I buy stock/etf, and keep them for long time. I do not need keep cash in the investment account (questrade).

Suppose I want to buy 1000 stock AAA, and the it's market price is $10. I usually transfer $11,000 from my bank account to questrade since the market price changed quickly, and transfer takes 1-2 business days.
After I bought 1000 AAA, I transfer the rest money back to my bank account. (keep the cash in questrade ZERO)

BUT I cannot use this way for my RRSP account. So my RRSP account always has cash left, stay there and no interest. it's not lots of money (usually several hundreds), but I want to know what's the best way to handle these cash? Is there any way to earn interest?
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7 replies
Deal Fanatic
Oct 7, 2007
9404 posts
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You could buy a high interest savings account like TDB8150 or the equivalent for your brokerage. They usually pay around 1.6% and often have 1-day settlement.
Deal Addict
Jun 28, 2018
1031 posts
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Toronto
choclover wrote: You could buy a high interest savings account like TDB8150 or the equivalent for your brokerage. They usually pay around 1.6% and often have 1-day settlement.
However, some or maybe all of these have a minimum buy in amount. If op is getting a few bucks left over it wouldn't work.

Really, for small amounts if above doesn't work, might not be too much that can be done.

If brokerage supports free to cheap commission could buy a small fund like PSA.


In addition, if supported, set drip on the stock/ETF holdings to reduce amount of cash in the account and acquire more slowly.
The Distracted Investor

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Member
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Jul 24, 2014
342 posts
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Toronto, ON
it's always better to open a position in index fund, many brokerage allow you to buy as little as 100 as long you already have over 1000 in your index position
i put all my changes there, and it grows too, better than GIC
Index Fund vs Individual Stock..."tigerdemi is a great man" tigerdemi said to himself in his dream.
Sr. Member
Nov 16, 2013
917 posts
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GTA
tigerdemi wrote: it's always better to open a position in index fund, many brokerage allow you to buy as little as 100 as long you already have over 1000 in your index position
i put all my changes there, and it grows too, better than GIC
How do you this in Questrade?

Also how do you handle the dividend received in TFSA account from ETFs? I know for shares, I can use DRIP
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Sep 18, 2016
501 posts
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vivmk20 wrote: How do you this in Questrade?

Also how do you handle the dividend received in TFSA account from ETFs? I know for shares, I can use DRIP
with Questrade you can buy as little as one share for free in an ETF. The div from ETF is the same as from shares, if you receive enough you can drip them.
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Sep 1, 2013
6198 posts
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tigerdemi wrote: it's always better to open a position in index fund, many brokerage allow you to buy as little as 100 as long you already have over 1000 in your index position
i put all my changes there, and it grows too, better than GIC
Agreed. Just to add to this, pick the index fund with the lowest fee you can find. Once the amount grows to to 2 or 3K, sell it and buy a stock/ETF
Member
Sep 23, 2010
474 posts
242 upvotes
TORONTO
choclover wrote: You could buy a high interest savings account like TDB8150 or the equivalent for your brokerage. They usually pay around 1.6% and often have 1-day settlement.

Pretty sure there is a short-term redemption penalty on this if you hold less than 30 days. So you might not want that if you're planning on moving to cash for a week or two and hoping to buy something on a dip.

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