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Where to invest money that I need in short/medium term?

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  • May 28th, 2020 7:53 pm
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Dec 27, 2011
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Where to invest money that I need in short/medium term?

I'm trying to figure out where the best place is to park my money that will be needed in the short and medium term (anywhere from 1-5 years, maybe even less). Basically I thought it would be best to start "savings funds" for my various short/medium terms needs...such as for house repairs, car repairs, pet emergency fund, vacations, eyeglasses, new winter/summer tires, new laptop, etc. But instead of literally setting up a dozen or so separate savings funds for each goal, I would just lump them all into a single "account" just for simplicity sake.

At first I thought about just putting the money into a savings account but those generally don't give much interest. Then I thought about GICs, such as 1 year GICs (e.g. Tangerine is currently at 1.75%). I would wait until I've saved up a certain amount (such as 1k) and then buy a 1 year GIC, then wait until I save up another 1k and buy another 1 year GIC and repeat.

I'm sure there are even better ways of doing this though so I'm hoping to hear some suggestions or what other people here are doing!

Btw I've got my long term investments (for retirement) in low cost index funds but I don't think I would want my short/medium term money tied up in the market.
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Jan 9, 2011
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For maximum flexibility you can't beat a HISA, but of course the interest rate isn't going to be great. But there are many that beat Tangerine's 1.75% with no lock-in.
RFD thread: official-rfd-thread-high-interest-savin ... 14-698055/

Also, check your Tangerine insights tab, I have a 2.50% offer until the end of September for new deposits (including to TFSA) that I just took advantage of.
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Kiraly wrote: For maximum flexibility you can't beat a HISA, but of course the interest rate isn't going to be great. But there are many that beat Tangerine's 1.75% with no lock-in.
RFD thread: official-rfd-thread-high-interest-savin ... 14-698055/

Also, check your Tangerine insights tab, I have a 2.50% offer until the end of September for new deposits (including to TFSA) that I just took advantage of.
Thank! I didn't realize that HISA would give the same or higher interest than GICs. This seems to be a much better option given you can withdraw money at any given time with no penalties. I suppose the downside is that the bank can change the interest rate whenever they want to (and it looks like some do change it quite often). Any other downside compared to GICs?
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Apr 13, 2019
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I am in same situation. Recently sold some stocks. Would like to buy Treasury Bills. Never done this before. Anybody out there ever bought treasury bills before? How did you make out?
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Sep 18, 2016
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HISA, done!
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Einsteinish wrote: I am in same situation. Recently sold some stocks. Would like to buy Treasury Bills. Never done this before. Anybody out there ever bought treasury bills before? How did you make out?
Don't treasury bills give tiny interest though?
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1Ogiku2 wrote: HISA, done!
Any downsides to HISA compared to GICs? It seems that HISA provides better growth while also enabling you to not lock in your money, so why would anyone use GICs? Im assuming because HISA could change the interest rate at any time?
Has HISA historically provided better returns than GICs or does it tend to fluctuate?
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Sep 18, 2016
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crystallight wrote: Any downsides to HISA compared to GICs? It seems that HISA provides better growth while also enabling you to not lock in your money, so why would anyone use GICs? Im assuming because HISA could change the interest rate at any time?
Has HISA historically provided better returns than GICs or does it tend to fluctuate?
Ok, I will answer to this. You are looking to stash cash, which you will need to buy everyday articles like, car repair and eyeglasses? You will need access to the money at all times not knowing when and how much. HISA is the way to do this without effort.

Do you actually know that you are just looking to stash cash for emergency needs? If not what are we talking about?
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crystallight wrote: Don't treasury bills give tiny interest though?
Treasury Bill's don't pay interest. You bid on them knowing what they will be worth on a cetrain date. They are government debt 100% guaranteed.
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1Ogiku2 wrote: Ok, I will answer to this. You are looking to stash cash, which you will need to buy everyday articles like, car repair and eyeglasses? You will need access to the money at all times not knowing when and how much. HISA is the way to do this without effort.

Do you actually know that you are just looking to stash cash for emergency needs? If not what are we talking about?
Not necessarily just emergency needs but planned needs as well. For example, back when I was going to set up several individual funds this included:
- vacations
- miscellaneous electronics (e.g. laptop, cell phone)
- home maintenance (e.g. roof...but not waiting until the roof is already starting to leak...)
- eyeglasses every X number of years

Etc
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Einsteinish wrote: Treasury Bill's don't pay interest. You bid on them knowing what they will be worth on a cetrain date. They are government debt 100% guaranteed.
Perhaps saying "interest" was the incorrect term but rather should be "rate of return"? Don't treasury bills provide a lower (possibly even much lower) rate of return compared to GICs or HISA?
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I will not farther comment on this farce.
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crystallight wrote: Not necessarily just emergency needs but planned needs as well. For example, back when I was going to set up several individual funds this included:
- vacations
- miscellaneous electronics (e.g. laptop, cell phone)
- home maintenance (e.g. roof...but not waiting until the roof is already starting to leak...)
- eyeglasses every X number of years

Etc
My setup is to have 3 buckets for short term: funds for emergency, funds for what I NEED and funds for what i WANT.

The emergency fund should be liquid and easily accessible, like a HISA. Define how many months worth of emergency you need to have. This is to cover absolutely required expenses if you lose your job, to ensure health, food and shelter.

The funds for what I NEED is for things that cannot really wait like dentist, eye exam, house maintenance / repairs. You want a portion in liquid assets like a HISA, and depending on your risk tolerance, a portion in other types of fixed income with a laddered approach.

The funds for what I WANT have a more flexible setup, they can wait, because I don’tneed it, I just want it. Like a new laptop, phone, other eletronics, vacation, etc. Your risk tolerance and time frame will determine the allocation for this.

The point is to let your money to work for you if you have a higher timeframe for certain objectives, while keeping them liquid / available if your timeframe is short / immediate. Consider a mix of HISA and maybe laddered bond funds with fixed maturity. Anything with a more attractive return will likely involve more risks, and therefore, require a longer timeframe.


Rod
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Mar 20, 2018
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rodbarc wrote: My setup is to have 3 buckets for short term: funds for emergency, funds for what I NEED and funds for what i WANT.

The emergency fund should be liquid and easily accessible, like a HISA. Define how many months worth of emergency you need to have. This is to cover absolutely required expenses if you lose your job, to ensure health, food and shelter.

The funds for what I NEED is for things that cannot really wait like dentist, eye exam, house maintenance / repairs. You want a portion in liquid assets like a HISA, and depending on your risk tolerance, a portion in other types of fixed income with a laddered approach.

The funds for what I WANT have a more flexible setup, they can wait, because I don’tneed it, I just want it. Like a new laptop, phone, other eletronics, vacation, etc. Your risk tolerance and time frame will determine the allocation for this.

The point is to let your money to work for you if you have a higher timeframe for certain objectives, while keeping them liquid / available if your timeframe is short / immediate. Consider a mix of HISA and maybe laddered bond funds with fixed maturity. Anything with a more attractive return will likely involve more risks, and therefore, require a longer timeframe.


Rod
IMO, holding bonds makes little sense in the current environment considering their risk/reward. HISA is a much better alternative.
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stanleyinfrared wrote: IMO, holding bonds makes little sense in the current environment considering their risk/reward. HISA is a much better alternative.
True, my setup started when rates were not so bad. Now it doesn’t make much sense to setup bonds, HISA is a better option.


Rod
Build a comprehensive portfolio based on Investing and Trading strategies. Check out these threads and join the discussion:

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