Where should I put cash?
3 ways to earn more interest
Right now, short-term investments are paying higher interest rates than longer investments. Let's say you pay all your bills, have cash set aside for monthly expenses and you still find you have cash left over. Cash is King! Especially right now but that does not mean that your mattress or your chequing account is the right place for those hard earned dollars. Whether you are an individual, a couple or a corporation you are likely not earning enough on your cash.
High interest savings accounts, Money Market or high yield investment account funds
Right now you can earn somewhere between 3.7% and 5.25% on new deposits, usually for a 1-3 month period. After that, the rate falls to something quite a bit lower. That's fine if you're going to need the cash right away, but not ideal for longer than a few months at a time. After that you may find yourself skulking around for the highest rates, yet again and having to move cash from one institution to another. Hopefully you have better ways to spend your time. There may be limits to the amounts you can invest or limits to the amount is protected from an institutional failure. Currently we like MIP610 Manulife Bank Investment Savings Account that pays 4.4% but may change at any time. Source https://advisor.manulife.ca/advisors/banking/manulife-bank-investments/investment-savings-account.html
2. GICs
They may be locked in for a period or redeemable but make sure to read the fine print on any redemption fees, penalties and exclusions. Either way, shorter maturities (less than 18 months) right now in the range of 4-4.5%, still better than longer maturities.
3. Bonds
Right now, government bonds that mature in 1 year or less are yielding 4.4% or more. There are no restrictions on the amount you can buy because the guarantee sits with the government that issued the bond. If you have cash coming in on a regular business, you may want to consider a bond ladder. We can help guide you as to the best way to get that done.
Just a reminder: If you have regular expenses in another currency or plan to vacation in another country, you may want to save in that currency. We have an easy way to get that set up for you.
Bottom line: If you have cash sitting in your bank account, your TFSA, your RSP or any other account you should get it invested in the timeframe that suits your personal or business needs. If you need help figuring out what is best for you, click here and we'll help you out.