Where to park money in Canada in interest bearing account?

[Marusko]

For the first time in my career there is a little extra cash that I need to put somewhere for a year. Would like to collect interest and be zero risk. This is in Alberta, Canada.

Are there any savings accounts or T bill accounts or ?? that pay 5% or better?

Bank of Marusko offering 7% interest 1-5 year GIC, compounded daily, paid annually. No minimum balance.

note: CDIC insurance application in progress.

A local one here had 4.95 , 1 year , cashable after 30 days

[shtferbrains]

Scotia was one but was gone last I looked.

[Oliver88]

Money parked in One Year Variable GIC, Prime minus 1.85% - Take out anytime after 30 days.

What company/bank has this GIC?

[Oliver88]

But these come with possibility of your capital going down if the share price goes down.

With CASH.TO you know you do not stand a chance of losing on your initial investment.

At 4.8% Vs 6% many would take the gaurenteed thing.

That’s a good point and something to consider.

Maybe a different strategy for a 30-50 year old vs a 65-85 year old?

I like the DRIP program with the dividend stocks within a TFSA or RRSP.

[farmboy44]

You also need to take into account the difference in tax treatment. Ignoring benefits of a TFSA, you do not pay much tax personally on a dividend but interest is taxed at full marginal rate. In company’s, dividends are still advantageous.

Not sure why you are telling me this, I said this exact thing a few comments up

Edit: sorry to hear you don’t like banks in your portfolio. That’s a policy that must have costed you returns over the years.

[Richard5]

But these come with possibility of your capital going down if the share price goes down.

With CASH.TO you know you do not stand a chance of losing on your initial investment.

At 4.8% Vs 6% many would take the gaurenteed thing.

You also need to take into account the difference in tax treatment. Ignoring benefits of a TFSA, you do not pay much tax personally on a dividend but interest is taxed at full marginal rate. In company’s, dividends are still advantageous.

Personally i don’t like a lot of banks in portfolio, consider a utility like Fortis or Emera, if you don’t like those, take a look at a royalty fund like Pizza Pizza, A&W or even Boston Pizza.

[farmboy44]

Other good options:
CIBC is 5.7% dividend
Enbridge is 6.5% dividend

But these come with possibility of your capital going down if the share price goes down.

With CASH.TO you know you do not stand a chance of losing on your initial investment.

At 4.8% Vs 6% many would take the gaurenteed thing.

[Oliver88]

CASH.TO

TSX Traded, now yielding 4.8% annually

withdraw at any times with no penalty. Very good liquidity - makes it much more attractive than a GIC

Other good options:
CIBC is 5.7% dividend
Enbridge is 6.5% dividend

[farmboy44]

And you believe this to be better than GIC's ??

I’m not trying to give advice to anyone, but I do believe this to be advantageous just due to the liquidity and non-commital nature of it. Withdraw anytime without penalty. I don’t see rates falling any this year so the monthly payments are unlikely to drop.

At any rate, these shares (or any GIC) should always be held in a tfsa or rrsp if you have room. Interest gains on such investments are not capital gains, they are regular income - so if not in a tax sheltered account your 5% claimed posted returns can turn into 3% net pretty quickly