Deal Details

Looking forward to reading the comparison!  One of my new years resolutions is to save more money
Any chance that you’ll be adding PC Financial to your comparison chart?  This is who I was thinking of opening a new account with…

lots of other banks that aren’t real banks have this option too, like ING, citizens, canadian tire, etc. chekc everybody out. there’s higher interest rates with banks that aren’t “real” banks.

SAVINGS:
HSBC has a choice of 6 TFSA accounts:
https://www.hsbc.ca/1/2/en/personal/chequing-savings/savings-accounts/tax-free-savings-account
Their TFSA savings account earns 3.75%+1.00o;nus.

MUTUAL FUNDS OR ETF’s:
If your RRSP and you want to have mutual funds you should try etrade:  https://www.canada.etrade.com/splash/TFSA.shtml

PC FINANCIAL also offers 3.75% + Annual Bonus on balances over $1,000/daily:

http://www.banking.pcfinancial.ca/a/rates/tfsaRate.page

The best part is that PC FINANCIAL has NO SERVICE FEES !

Mudgirl - Go with PC FINANCIAL. 

HSBC direct has no service fees and no minimum balance.

can’t wait for the chart. im really confused about this!
thanks rfd!

Confused...then maybe you need an INDEPENDANT Certified Financial Planner, CFP to assist you. There are many of them out there...Most of these institutions you previously mentioned all ‘sell’ proprietory products...meaning that they can only sell their own product even if they know of better products available to you. Go with someone who is not sleeping with their employer...that way there will be no conflict of interest and you will get the best impartial advice available. I did it and I don’t regret it for one moment...and you don’t need thousands of dollars either…

Great unbiased article about TFSAs here:

https://www.retirementadvisor.ca/retadv/apps/articles/articles.jsp?articlePage=TFSA200812&learningMenu=articles

Best interest rates are offered by online banking accounts. (meaning accounts are opened and managed online)

ICICI
ING
PCF
HSBC direct..

Currently PCF is offering 3.75% (thats the best rate)

ICICI was offering the best rate.. but last month they dropped it..

Don’t sell yourself or this account short.  It can do way more for you than allow you to earn 3.75% tax free. 

There are stocks out there right now that are yielding much higher than 3.75% and have the opportunity over time to appreciate in value. 

There is a limited amount you are allowed to contribute to this account and long term it can help you achieve meaningful financial goals better than the tax savings on 3.75% of interest. 

I’m not looking for a way to get the highest interest rate on this account, I am looking on how this account can help me achieve my long term financial goals and I will continue to pay the tax on 3.75% of interest.

Potzie, great post, but my planner has advised me that all tax inefficient investments should go into this account...ie interest paying investments vs Dividends and capital gains...also, one should also dtermine whether or not it is best to pass on the TFSA and max out their RRSP first...each indvidual circumstance is different so as I said before, a qualified financial planner can determine which route is best for you.

As a Certified Financial Planner among other financial designations I hold, I agree that working with a financial planner is important, but I think working with one who has thought out this account is even more important. 

Please be patient as I explain:

Original Assumptions
One Time investment of $5,000 invested for 10 years
Marginal Tax Rate of 42%

Interest Investment:

3.75%/year means you would earn a total of $2,225.22 in interest since there would be no taxation you would reinvest all the interest to compound the following year.

Over the 10 years at a marginal tax rate of 42% you would save a total of $934.59 in tax.

Capital Appreciation Investment:

Compounds at 8%/year for 10 years means your $5,000 invested is now worth $10,794.62.  (I understand that you might notearn 8% each and every year, but if your average is 8% over time during accumulation sequence of returns does not matter).  Outside of a TFSA you would have a capital gain of $5,794.62 which means with a 50% inclusion on capital gains and a marginal tax rate again of 42% you would have saved $1,216.87 in tax. 

Would you rather save $934.59 in tax or $1,216.87 in tax?  Also the ending value is obviously higher in the Capital Appreciating investment since you maximized the rate of return on the investment.

If you can generate the same rate of return on your interest investments as you might expect in a capital appreciating investment then clearly the least tax efficient investment should be placed in this account, but many are looking for the highest rate of interest and I am saying you can do much better with this account if you look to maximize the opportunity.

Things can often be more than they appear and that’s why working with a financial planner is so important.

Also if you look at the numbers and maintain a constant tax rate throughout the period RRSPs and TFSAs are equal as an investment option.  RRSPs could affect some benefits in retirement if you have too much income from them, but most can’t have the retirement they desire by saving just $5,000/ year so they will need to use the RRSPs regardless. 

I will be using my TFSA to save for my lump sum purchases (cars/travel/home repairs) in retirement and my RRSP for the regular stream of income that I desire during retirement.  Overtime this should allow me to level out my taxable retirement income and help avoid years that require large registered account withdrawals and the benefit losses that it could generate.

well said potzie

"(I understand that you might notearn 8% each and every year, but if your average is 8% over time during accumulation sequence of returns does not matter). “

In this period:  Unlikely.

bestbargains, you are certainly entitled to your opinions, but I prefer to invest for the long term with my long term goals and expect that over time I will be rewarded with returns that exceed those of a savings account or 1 year GIC.  There will obviously be times where I will underperform, but if you can consistently time the market you would be so wealthy you wouldn’t need to be on RFD with your name being bestbargins.

Be aware.Read the"fine"print,before you deposit your TSFA.I have at tfsa with PC Financial. Signed in at 3.75%.We all know % rates change.PC changed to 3.05% quickly.If you wish to withdraw your deposit,make sure you DO NOT do an inter bank transfer,it will cost you(I think) $50.00. Write them a letter,say you want to close your account, and I guess they cut you a check and mail it(that was in the fine print).
I’m wondering if the banks are ripping us of again, in their subtle ways..YA THINK!!! ?

I have the fortune of being financially well off to comment as I have. 

And while I, too, have a number of designations that is besides the point.

Just look at the economy now, and I would be the last to cast any stone, never mind the same mindset that got many where they are now.  There is only one thing certain - even long term - and that is uncertainty.

I will leave it at that, ‘potzie’.

spitfire43 - Interest rates do rise and fall. But should let you know, even when PC was offering 3.75, ING Direct was offering only 2.7.

If you want to transfer you certainly can, but there is nothing stopping from opening up other accounts Other Financial Institutions without having to close or transfer you PC TFSA.  Just keep your $5,000 amount in mind wherever you deposit or withdraw.  Whatever you take out during the year, you can put back, in following year(s).