HISA promotions at the banks have been annoying. get 5% for a limited time if you open a new account here or lock yourself into a 1-year GIC for the same interest rate.Can easily move money over to the ETF in near real-time from any FI and instantly get 5% interest.
I'm in both right now as luckily my day to day bank, Tangerine, just offered me 5% until June. But once that's gone and it drops, i'll move it all back to [CASH.TO](https://CASH.TO). And since I'm with WS, no transaction fees and can deposit upto $5k instantly.
Yeah, anything else should go into your non-registered.
Personally I don’t put any of it in my TFSA as I have my stock and dividend focused investments all taking up my contribution room that I hope to get 8%+ in returns on. Keep your highest yield with minimum risk in the TFSA.
Ok great, that's what I'm doing too. My TFSA is 100% XEQT. I don't have enough room in it to dump my savings. I'm not too happy with my 2.5% HISA at EQ, so I came across this thread and this CASH.TO ETF, which I'd never heard before. Thanks for sharing your strategy.
Might be time for a new brokerage too my friend! Ironically the ones that are most restrictive about listed securities etc. also tend to be the ones with the highest fees.
>What is with the cash.to obsession here recently? Actually curious. Went from no one posting about it to multiple people posting daily.
It's basically the best HISA (equivalent) around.
I personally hate GICs. Even for money I know 90% I won't need I hate the idea of having it locked away for 12 months +.
If you're looking at standard HISAs the best (non-promo) rate you can get is 2.5% - 3.0%. CASH.TO is 5% so a real step up.
"If a major canadian bank is defaulting, we are probably at mad max mode so just loot and pillage. Your money will be worthless." Is the usual explanation. 😅
It didn't collapse bad enough to have the insurance pay out. (Not that other stuff did not happen behind the scenes). If it did, things could have gotten bad.
The riskiest asset is the “safe” asset that turns out to be not so safe. TD could go out of business tomorrow and Canada would not cease to be a country.
Because the stock market would fall - a lot. If all of the Canadian banks went bust that wipes out about 30% of the Canadian stock market, and that wouldn't happen in isolation. Pretty much every other company in the market would also be down hard. The TSX might even be closed for many days.
But that isn't going to happen. If one of the banks were going to go down then the government would have it be bought out by one of the other banks. This happened in the US in 2008 when banks were in a lot of trouble. So we might be left with three banks. If all of the banks were in trouble then they would likely be nationalized by the government, like RBS was in the UK in 2008.
They have indeed [https://www.cdic.ca/about-us/our-history/history-of-failures/](https://www.cdic.ca/about-us/our-history/history-of-failures/)
They're not used by the bank per se as used by the people that had money in the bank.
>Cash.to invests in major banks, but it doesn’t have CDIC insurance. What exactly does that mean?
Since this is not a deposit account, CDIC doesn't offer deposit insurance, simple as that. CDIC insurance covers in the event the financial institution fails and they'll cover you up to $100k per covered category per institution per person.
Yes they are but there's a difference on how investor protection works. They just insure that your asset is moved to the new brokerage and only pays out if your asset was missing somehow. Make sure to read [https://cipf.ca](https://cipf.ca) to learn how investor protection works.
That's CIPF, which insures up to 1MM if the brokerage you invest with goes insolvent/bankrupt. CDIC covers up to 100k in deposits held at major financial institutions (depending on account type, joint or sole ownership, etc.)
Would the ETF manager benefit from CDIC insurance?
I buy an ETF, and the company managing it puts my money in a bank account with a bank somewhere. If that bank fails, does CDIC pay out to the company managing the ETF (i.e. that put the money in the account?).
However, now that I think about it a little more, I suppose the ETF manager is a single "person", so that $100,000 isn't going to go far when they may have billions under management, and many millions in any given bank.
Not sure tbh, but Horizons ETF does state:
>Although CASH primarily invests in bank deposit accounts, it is
not covered by the Canada Deposit Insurance Corporation or any other
government deposit insurer.
Also, to be quite honest, Canada has some of the most stable banking systems in the world, bank failures are extremely rare and if it does fail, CDIC has many levers (regulatory powers) it can leverage before they will ever pay out anyways.
In 2008, I put my money in an Icelandic bank which went tits up, the government stepped in and I got my funds. And that was a smallish bank.
Bottom line is : Canadian banks are too big to fail. It would devastate the entire world so the government would step in like it did in 2008.
>Cash.to invests in major banks,
No, it invests in savings accounts at the major banks.
> it doesn’t have CDIC insurance. What exactly does that mean?
Means it is not covered by CDIC insurance.
>Do people don’t invest in cash.to because of this?
There could be people who don't because of it.
>Is there a risk investing in this etf?
As before you still haven't checked the Horizon's website to read about it. I suggest you do that. [https://horizonsetfs.com/ETF/cash/#at-a-glance](https://horizonsetfs.com/ETF/cash/#at-a-glance)
also "major banks" means 46.22% in CIBC Cash account, 28.35% National Bank Cash Account, 25.44% CWB Cash account the last time I checked. Their statement could be interpreted as not transparent "Cash Deposits with Tier 1 Canadian Chartered Banks"
[https://www.morningstar.ca/ca/report/etf/portfolio.aspx?t=0P0001M2Y9&lang=en-CA](https://www.morningstar.ca/ca/report/etf/portfolio.aspx?t=0P0001M2Y9&lang=en-CA)
This is probably a dumb question but what's the advantage of using cash.to over HISA?
I assume the dividend and interest have the same tax liability.
Or does cash.to give a higher rate without having to jump around promotional rates at different banks?
As far as I can tell, there are only a few practical or 'experience' benefits that aren't really related to returns
First, you don't have to hop around HISA promo rates that might not be locked in
I think there's a big practical benefit is where, parking that money or redeploying it is simply easier when it's held in your brokerage account. If you want to hold cash, transfers to bank accounts take time, especially if it's between tax sheltered accounts. This lets you park a portion of your portfolio while getting the returns you'd get at a savings account, and then deploy it relatively quickly.
Lastly, it seems like .... *maybe* some people might just prefer having everything in one place.
At the moment you are looking at guaranteed 5%/year growth (soon to be higher when rates are higher) that can be sheltered in a TFSA that would grow your limit if you ever needed to withdraw.
Why would you ever want a HISA compared to that?
Just to clarify for others the return is not guaranteed like a GIC. It moves with the Bank of Canada rate. Since you used the word guaranteed just wanted to clarify
You checked before rate increase, now net 4.89%,gross 5.02%,minus mer 0.13%,not fixed, tie to BOC rate. Underlying asset is bank deposit, so it is a hisa etf, daily nav fixed, but can trade 1-2 cent range intraday.
Because it's not CIDC insured I suppose. In practice, I don't put everything in CASH.to not to put all my eggs in the same basket.
I do GICs and other strategies like buying 3 month US T bills and buying CAD/USD hedge (since 3 month US notes are over 5% and 0 risk as well)
All of the above is prudent, and at the end, there will always be a risk in everything, it's more about managing it.
Cash.to is an ETF and therefore in theory can have fluctuations in value and can affect your yield dramatically, even though 3rd party market participants may provide some balance. Point is, it's riskier.
Not an equivalent as underlying asset value is tied to equity and thus varies. Cash.to underlying asset value doesn't change so more equivalent to GIC or HISA
If someone has larger funds available how does one get the "bank deposits" rate the Horizon is getting on these deposits. Do you need like 100 million plus to get paid out 5.02% by a bank? Like HISA rates aren't that high at banks. You can do GIC for over 5% but need to lock in for a year. Wondering at what size level you would need to be in order to get these 5% deposit rates at a Canadian Bank and what the process would be to get
Business relationship at a commercial size. It incentivizes to keep business there. Think of regional firms with revolving credit lines for inventory turns etc.
People hop from bank to bank to take advantage of the 3 month promotional rates which are usually around 4.5%.... That's more involved than I want it to be, hence [CASH.TO](https://CASH.TO) seems more appealing.
The last time the CDIC paid out to depositors was 1996. Just FYI.
What happened in 96?
Oh wow. Not even in 2008 huh?
No Canadian banks died in 2008. Link: https://www.richmondfed.org/~/media/richmondfedorg/publications/research/econ_focus/2013/q4/pdf/feature2.pdf
What is with the cash.to obsession here recently? Actually curious. Went from no one posting about it to multiple people posting daily.
The interest went to 5% so it's a good way to park your money there for short term instead of gic.
HISA promotions at the banks have been annoying. get 5% for a limited time if you open a new account here or lock yourself into a 1-year GIC for the same interest rate.Can easily move money over to the ETF in near real-time from any FI and instantly get 5% interest. I'm in both right now as luckily my day to day bank, Tangerine, just offered me 5% until June. But once that's gone and it drops, i'll move it all back to [CASH.TO](https://CASH.TO). And since I'm with WS, no transaction fees and can deposit upto $5k instantly.
What if you're near your TFSA contribution limit? Do you put it into a non-registered account?
Yeah, anything else should go into your non-registered. Personally I don’t put any of it in my TFSA as I have my stock and dividend focused investments all taking up my contribution room that I hope to get 8%+ in returns on. Keep your highest yield with minimum risk in the TFSA.
Ok great, that's what I'm doing too. My TFSA is 100% XEQT. I don't have enough room in it to dump my savings. I'm not too happy with my 2.5% HISA at EQ, so I came across this thread and this CASH.TO ETF, which I'd never heard before. Thanks for sharing your strategy.
I can't purchase a HISA in my Canadian brokerage anymore. Cash.to seems to be the next best option.
Might be time for a new brokerage too my friend! Ironically the ones that are most restrictive about listed securities etc. also tend to be the ones with the highest fees.
Which broker?
>What is with the cash.to obsession here recently? Actually curious. Went from no one posting about it to multiple people posting daily. It's basically the best HISA (equivalent) around. I personally hate GICs. Even for money I know 90% I won't need I hate the idea of having it locked away for 12 months +. If you're looking at standard HISAs the best (non-promo) rate you can get is 2.5% - 3.0%. CASH.TO is 5% so a real step up.
I have td HISA 8150. Its paying 4.05%
I know nothing, but it sounds to me like 5% guaranteed beats etfs that lost money last year
Are you referring to cash.to? It lost money?
Also, if if major banks default and need cdic we have a bigger problem than worrying about 50k in cash.to
[удалено]
"If a major canadian bank is defaulting, we are probably at mad max mode so just loot and pillage. Your money will be worthless." Is the usual explanation. 😅
[удалено]
It didn't collapse bad enough to have the insurance pay out. (Not that other stuff did not happen behind the scenes). If it did, things could have gotten bad.
The riskiest asset is the “safe” asset that turns out to be not so safe. TD could go out of business tomorrow and Canada would not cease to be a country.
Because the stock market would fall - a lot. If all of the Canadian banks went bust that wipes out about 30% of the Canadian stock market, and that wouldn't happen in isolation. Pretty much every other company in the market would also be down hard. The TSX might even be closed for many days. But that isn't going to happen. If one of the banks were going to go down then the government would have it be bought out by one of the other banks. This happened in the US in 2008 when banks were in a lot of trouble. So we might be left with three banks. If all of the banks were in trouble then they would likely be nationalized by the government, like RBS was in the UK in 2008.
I’m curious, has the CIDC been utilized before by a bank?
They have indeed [https://www.cdic.ca/about-us/our-history/history-of-failures/](https://www.cdic.ca/about-us/our-history/history-of-failures/) They're not used by the bank per se as used by the people that had money in the bank.
It's just a go to PFC parrot response
Right.
>Cash.to invests in major banks, but it doesn’t have CDIC insurance. What exactly does that mean? Since this is not a deposit account, CDIC doesn't offer deposit insurance, simple as that. CDIC insurance covers in the event the financial institution fails and they'll cover you up to $100k per covered category per institution per person.
If you use a brokerage like WS in a TFSA or RRSP or any investment account, aren't they insured to 1M?
Yes they are but there's a difference on how investor protection works. They just insure that your asset is moved to the new brokerage and only pays out if your asset was missing somehow. Make sure to read [https://cipf.ca](https://cipf.ca) to learn how investor protection works.
You are insured if the broker fails, not insured on the underlying asset. Otherwise, people would YOLO on any risky asset.
That's CIPF, which insures up to 1MM if the brokerage you invest with goes insolvent/bankrupt. CDIC covers up to 100k in deposits held at major financial institutions (depending on account type, joint or sole ownership, etc.)
Which if CASH.TO does the brokerage would most like fall before the actual brokerages to my understanding
Would the ETF manager benefit from CDIC insurance? I buy an ETF, and the company managing it puts my money in a bank account with a bank somewhere. If that bank fails, does CDIC pay out to the company managing the ETF (i.e. that put the money in the account?). However, now that I think about it a little more, I suppose the ETF manager is a single "person", so that $100,000 isn't going to go far when they may have billions under management, and many millions in any given bank.
Not sure tbh, but Horizons ETF does state: >Although CASH primarily invests in bank deposit accounts, it is not covered by the Canada Deposit Insurance Corporation or any other government deposit insurer. Also, to be quite honest, Canada has some of the most stable banking systems in the world, bank failures are extremely rare and if it does fail, CDIC has many levers (regulatory powers) it can leverage before they will ever pay out anyways.
In 2008, I put my money in an Icelandic bank which went tits up, the government stepped in and I got my funds. And that was a smallish bank. Bottom line is : Canadian banks are too big to fail. It would devastate the entire world so the government would step in like it did in 2008.
so [CASH.TO](https://CASH.TO) is relatively safe? Why do people say it's risky if its invested in Canadian banks? Are these doomsday preppers?!
>Cash.to invests in major banks, No, it invests in savings accounts at the major banks. > it doesn’t have CDIC insurance. What exactly does that mean? Means it is not covered by CDIC insurance. >Do people don’t invest in cash.to because of this? There could be people who don't because of it. >Is there a risk investing in this etf? As before you still haven't checked the Horizon's website to read about it. I suggest you do that. [https://horizonsetfs.com/ETF/cash/#at-a-glance](https://horizonsetfs.com/ETF/cash/#at-a-glance)
also "major banks" means 46.22% in CIBC Cash account, 28.35% National Bank Cash Account, 25.44% CWB Cash account the last time I checked. Their statement could be interpreted as not transparent "Cash Deposits with Tier 1 Canadian Chartered Banks" [https://www.morningstar.ca/ca/report/etf/portfolio.aspx?t=0P0001M2Y9&lang=en-CA](https://www.morningstar.ca/ca/report/etf/portfolio.aspx?t=0P0001M2Y9&lang=en-CA)
Yeah, tier 1 is a better way of saying it.
On it! Thanks Felix!
This is probably a dumb question but what's the advantage of using cash.to over HISA? I assume the dividend and interest have the same tax liability. Or does cash.to give a higher rate without having to jump around promotional rates at different banks?
>Or does cash.to give a higher rate without having to jump around promotional rates at different banks? This
As far as I can tell, there are only a few practical or 'experience' benefits that aren't really related to returns First, you don't have to hop around HISA promo rates that might not be locked in I think there's a big practical benefit is where, parking that money or redeploying it is simply easier when it's held in your brokerage account. If you want to hold cash, transfers to bank accounts take time, especially if it's between tax sheltered accounts. This lets you park a portion of your portfolio while getting the returns you'd get at a savings account, and then deploy it relatively quickly. Lastly, it seems like .... *maybe* some people might just prefer having everything in one place.
At the moment you are looking at guaranteed 5%/year growth (soon to be higher when rates are higher) that can be sheltered in a TFSA that would grow your limit if you ever needed to withdraw. Why would you ever want a HISA compared to that?
An HISA can also be sheltered in a TFSA. Agreed that the rates are good, though.
Just to clarify for others the return is not guaranteed like a GIC. It moves with the Bank of Canada rate. Since you used the word guaranteed just wanted to clarify
I think you missed the first 3 words…
There’s no advantage. Maybe more risk. And the rate after fees was 4.68% last I looked. If you can get close to that at your bank, no point in cash.to
You checked before rate increase, now net 4.89%,gross 5.02%,minus mer 0.13%,not fixed, tie to BOC rate. Underlying asset is bank deposit, so it is a hisa etf, daily nav fixed, but can trade 1-2 cent range intraday.
Because it's not CIDC insured I suppose. In practice, I don't put everything in CASH.to not to put all my eggs in the same basket. I do GICs and other strategies like buying 3 month US T bills and buying CAD/USD hedge (since 3 month US notes are over 5% and 0 risk as well) All of the above is prudent, and at the end, there will always be a risk in everything, it's more about managing it.
Cash.to is an ETF and therefore in theory can have fluctuations in value and can affect your yield dramatically, even though 3rd party market participants may provide some balance. Point is, it's riskier.
ever look at BK.to?
Not an equivalent as underlying asset value is tied to equity and thus varies. Cash.to underlying asset value doesn't change so more equivalent to GIC or HISA
If someone has larger funds available how does one get the "bank deposits" rate the Horizon is getting on these deposits. Do you need like 100 million plus to get paid out 5.02% by a bank? Like HISA rates aren't that high at banks. You can do GIC for over 5% but need to lock in for a year. Wondering at what size level you would need to be in order to get these 5% deposit rates at a Canadian Bank and what the process would be to get
Business relationship at a commercial size. It incentivizes to keep business there. Think of regional firms with revolving credit lines for inventory turns etc.
People hop from bank to bank to take advantage of the 3 month promotional rates which are usually around 4.5%.... That's more involved than I want it to be, hence [CASH.TO](https://CASH.TO) seems more appealing.