LF: Best U.S. Account

[ghettogal]

I have a few thousand dollars in U.S. dollars and was wondering what account is best to let it just sit there and collect interest. I don't want to transfer them back into cdn until their dollar goes back up. I have a td account right now and the interest is next to nothing. I wouldn't mind purchasing gic and havin' it locked up for awhile. I don't see myself using it anyways. Please let me know which bank could give me the best interest rate. Thanks!

[Lyrrad0]

The problem with USD in Canadian banks is that it's not covered by CDIC, so you have to be careful what bank you invest it in.

ICICI offers 2.5%, but some people on this board don't like them.

Since you're with TD, the easiest thing to do would be to open a TD Waterhouse account, and purchase a USD Money Market account. (No fees if you subscribe to eServices). For example, the RBC Money market fund (RBF261) is currently yielding 2.204%. That seems to be the best mutual fund available for USD for amounts less than $100K. (Someone post if there's a better one available). I assume that TD Waterhouse will also allow you to buy USD term deposits, but I'm unsure what their rates are now.

[HammerRFDer]

Or you could buy US stocks, or even a Canadian stock that is traded in US$ (most of the bigger ones are listed on both the NYSE and TSX). The Canadian banks are cheap these days, and the dividend should still be eligible for tax credits.

Though keep in mind, if the stock is mainly held by Canadians, it would likely rise and fall with the strength of the Canadian currency. However, companies like RIMM, though Canadian, will not be as impacted by changes in Canadian currency valuations, since they're mostly US-owned. (My guess anyways)

[ber0]

ING offers short term (90 days for 2%) and long term (1yr for 2.65%, 5 yrs for 3.75%) US GIC accounts... check their rate at:

http://www.ingdirect.ca/en/accounts-rates/historicalenusdgic.jsp

However, I believe you need to have an account with them to be able to have those kind of US$ GICs (you need to login and then choose from the open menu US GIC account)... I don't know why they don't market it on their main website like their CDN GIC and savings accounts or their US savings accounts.

[bonzo]

The problem with USD in Canadian banks is that it's not covered by CDIC, so you have to be careful what bank you invest it in.

ICICI offers 2.5%, but some people on this board don't like them.

Since you're with TD, the easiest thing to do would be to open a TD Waterhouse account, and purchase a USD Money Market account. (No fees if you subscribe to eServices). For example, the RBC Money market fund (RBF261) is currently yielding 2.204%. That seems to be the best mutual fund available for USD for amounts less than $100K. (Someone post if there's a better one available). I assume that TD Waterhouse will also allow you to buy USD term deposits, but I'm unsure what their rates are now.

Thank you for posting the RBC US money market (RBF261) I have been looking for a better paying US money market than TD's.

Do you know what the highest paying Cdn money market...is it Altamira?

[Fallschirmjagr]

Thank you for posting the RBC US money market (RBF261) I have been looking for a better paying US money market than TD's.

Do you know what the highest paying Cdn money market...is it Altamira?

Try PH US Money Market US$:


http://www.morningstar.ca/globalhome/QuickTakes/Fund_Overview.asp?fundid=4960



But I agree with the above poster in regards to investing in Canadian Bank stocks listed in the NYSE(BMO has great valuations and a high dividend yield, RY is still RY) instead.


Dividend income from a canadian corporation beats interest income not only for the higher yield but for favorable taxation.



regards,

[Lyrrad0]

Try PH US Money Market US$:


http://www.morningstar.ca/globalhome/QuickTakes/Fund_Overview.asp?fundid=4960



Looks like the minimum is $5000 for that fund, so it might not meet the initial poster's needs. Also, I don't see it available from TD Waterhouse (just the regular fund, Series B and F seem to be available there).

[Fallschirmjagr]

Looks like the minimum is $5000 for that fund, so it might not meet the initial poster's needs. Also, I don't see it available from TD Waterhouse (just the regular fund, Series B and F seem to be available there).


Try a search for PHN500. If it's available at RBC Direct Investing then I'm sure that TD Waterhouse would have it.


As for the min, forgive me, I equated "a few thousand" to five. It's a shame because that Money Market fund has a low MER(.6) and Fee(.5) with No Load.



regards,

[Lyrrad0]

Try a search for PHN500. If it's available at RBC Direct Investing then I'm sure that TD Waterhouse would have it.



I guess $5000 will be close to what the poster has. Strangely when I search for PHN500 in TDW, I get a fund with a current yield of 1.34%. That's why I thought it was different than the fund you indicated, since it looked like a better fund than the RBC one from the MorningStar page.

It appears that the PHN one has done better in the long run, over the past several years, but the RBC one has been doing better for the past few months.

[Fallschirmjagr]

I guess $5000 will be close to what the poster has. Strangely when I search for PHN500 in TDW, I get a fund with a current yield of 1.34%. That's why I thought it was different than the fund you indicated, since it looked like a better fund than the RBC one from the MorningStar page.

It appears that the PHN one has done better in the long run, over the past several years, but the RBC one has been doing better for the past few months.


Indeed.


But always consider the fees(MERs and Mgt). The good funds become even better funds when less is skimmed off your return(real).


In case some of you Mutual Fund investors didn't know yet, Morningstar.ca is highly recommended. Normally I don't recommend Mutual Funds considering that I haven't invested in Mutual Funds for over 15 years and I'm all invested in stocks but that site offers fabulous research material for canadian Mutual Funds.


On an ending note, Philip Hager & North(PH&N) is owned by RBC.


regards,

[Fallschirmjagr]

Forgot about this one:


Do you know what the highest paying Cdn money market...is it Altamira?


I'd say it's a tie between Altamira T Bill(AIS 928) and PH & N Canadian Money Market(PHN120).


Altamira: http://www.morningstar.ca/globalhome/QuickTakes/Fund_Overview.asp?fundid=2670
PH&N: http://www.morningstar.ca/globalhome/QuickTakes/Fund_Overview.asp?fundid=3814


But again, I'd recommend Canadian Bank stocks(in CAD) instead for dividend yields.


regards,

[s.m.c]

Try a search for PHN500. If it's available at RBC Direct Investing then I'm sure that TD Waterhouse would have it.

I was not able to purchase the PH&N $US MM fund through TDW when I tried a few months back. I purchased the RBC fund instead.

[Lyrrad0]

Of course, if you can, you could also open a Savings account at a US bank. Some banks are offering 3.50% and higher with FDIC insurance, but it's difficult for Canadians to get those rates. I'm finding for CAD that savings accounts usually offer comparable or better rates than Money Market funds unless you qualify for those premium MM funds (usually >$100K).

[ghettogal]

I do have 5000, i have about 7. I'm reading through the thread and I really don't understand any of the finance terms. I was thinking highest interest rate in GIC. If I sign up at TD Waterhouse or purchase PHN500, would that also mean that I could lose some money? I just want something that will build interest...don't want to take too much risk w/ the money.

[Lyrrad0]

I do have 5000, i have about 7. I'm reading through the thread and I really don't understand any of the finance terms. I was thinking highest interest rate in GIC. If I sign up at TD Waterhouse or purchase PHN500, would that also mean that I could lose some money? I just want something that will build interest...don't want to take too much risk w/ the money.

Well, money market funds are historically very safe. But, there are risks. I use them to store money in a safe place, but you should make the determination yourself. It is assumed that if a MM fund is about to lose money, the company sponsoring it will attempt to put some of their own money into the fund to avoid "breaking the buck" (having the unit value drop below $1 or the regular unit value of the fund).

With a USD GIC in Canada, it is guaranteed by the bank you are buying it from.

I personally used a USD MM fund when I wanted to have my money in a safe investment.

[ghettogal]

so you would make more w/ a MM fund than gic i would assume? I know nothing about these things. Where and how should I start? Should I put what I have into the PHN500 you guys are talking about or play it safe? Also, when it says 2.3% in 190 days and 3.75% in 5 years, which one is greater? Do I get 2.3% after the 190 days or is it 2.3% per yr and then 190 days percent of the 2.3%? if not, would u make more if u keep buying short term rather than hold it out for the long term?

[Lyrrad0]

so you would make more w/ a MM fund than gic i would assume? I know nothing about these things. Where and how should I start? Should I put what I have into the PHN500 you guys are talking about or play it safe? Also, when it says 2.3% in 190 days and 3.75% in 5 years, which one is greater? Do I get 2.3% after the 190 days or is it 2.3% per yr and then 190 days percent of the 2.3%? if not, would u make more if u keep buying short term rather than hold it out for the long term?

Generally GICs give higher returns than Money market funds. Interest rates are generally given as an annual rate. For example, if you hold a $1000 GIC for 180 days at a rate of 10%, you'll earn $50 in interest.

I think that USD products are uncompetitive in Canada because there's low demand for them. For example, in the US, I can get a savings account for 3.75%, and a 1 year GIC for 5%.

[ghettogal]

Generally GICs give higher returns than Money market funds. Interest rates are generally given as an annual rate. For example, if you hold a $1000 GIC for 180 days at a rate of 10%, you'll earn $50 in interest.

I think that USD products are uncompetitive in Canada because there's low demand for them. For example, in the US, I can get a savings account for 3.75%, and a 1 year GIC for 5%.

And I'm guessing you can only get a us savings account if you live in the u.s.? So should I just stick w/ GIC? or should I go for the MMF?

[HammerRFDer]

And I'm guessing you can only get a us savings account if you live in the u.s.? So should I just stick w/ GIC? or should I go for the MMF?

Nope, Canadians can get US Bank accounts in the USA. Do a Google search, guides aren't hard to find. No SSN required. The main problem is that many of the "high-interest savings accounts" down there are through virtual/online banks, where you would expect some difficulty getting an account at as a Canadian, since you need to open them in-person as a foreigner.

[ghettogal]

i've been searching and i can't really find anything. What's the best u.s. savings account at a u.s. bank right now? I don't mind going over there to open an account..I'm thinking of going on black friday.

[Fallschirmjagr]

i've been searching and i can't really find anything. What's the best u.s. savings account at a u.s. bank right now? I don't mind going over there to open an account..I'm thinking of going on black friday.


Try this link(thanks to Hammer for the Google suggestion):


http://dan.matan.ca/US-Bank-Account-For-Canadians-Save-on-Currency-Exchange-Paypal



I have an account with Chase(International Banking) and it currently yields at 1.8. The only problem is if you don't have $15000 and their checking account you'll pay a monthly fee of $20.


regards,

[1226]

i've been searching and i can't really find anything. What's the best u.s. savings account at a u.s. bank right now? I don't mind going over there to open an account..I'm thinking of going on black friday.

Wamu = 3.69% savings and 5% for 12 month CD

[Lyrrad0]

Wamu = 3.69% savings and 5% for 12 month CD

WaMu's savings account is tough to get for Canadians. You need a SSN to open the Online Savings account, since they only let you open it online (not in a branch).

[Noobzilla]

I don't want to transfer them back into cdn until their dollar goes back up.

You're assuming the US dollar will go back up, but there is no way to predict currency fluctuations. If you will ultimately be using the money in CDN, I would suggest converting to CDN now so as to eliminate foreign currency risk and take advantage of higher rates in CDN.

For example, look at ING:
Investment Savings Account (ISA) 3.00%

US$ Investment Savings Account (US$ ISA) 1.75%

You wouldn't want the USD account, unless you're betting that the USD will go up. But there's only a 50% chance you're right.

It will be a crazy day on the markets tomorrow with the announced government takeover of Fannie and Freddie. Who knows what will happen to your USD. You could go the more complicated route, and put your money in a US bank, but it will not be insured, and not all US banks are expected to survive the current mortgage / credit crisis.

You'll get hit with a fee when you transfer to CDN, but this is an inevitable fee anyway if you're ultimately switching to CDN, and your money in CDN is more in fit with your goal of a low risk investment.

[HammerRFDer]

You're assuming the US dollar will go back up, but there is no way to predict currency fluctuations. If you will ultimately be using the money in CDN, I would suggest converting to CDN now so as to eliminate foreign currency risk and take advantage of higher rates in CDN.
If they ultimately do want to use their US$ to buy stuff in the US, then it would be best for them to _not_ exchange their money, since that commission is a guaranteed loss. However, if they're merely speculating and do plan on exchanging back into Canadian Dollars one day, I would agree with you.

You could go the more complicated route, and put your money in a US bank, but it will not be insured,
Canadians will get the FDIC insurance when they put their funds in a US Bank Account.
But if you put your US$ in a Canadian bank account it is NOT CDIC insured.

But definitely, the market will be "interesting" tomorrow...

[1226]

WaMu's savings account is tough to get for Canadians. You need a SSN to open the Online Savings account, since they only let you open it online (not in a branch).

Well that sucks. Any idea what rates Canadians are eligible for with Wamu? I was planning on opening a "checking" account there anyway but it would be nice to get decent savings rates as well.

[ghettogal]

hmm....well...i don't want to switch them over right now b/c i've already lost quite a bit from the dollar going up. I do predict that u.s. will gain back quite a bit but like u said it's 50/50. I'm in no rush to changing it back to cdn dollar so if i can gain some by putting it in a high interest savings account or gic i would. And it will also save me the hassle of transferring money back and forth when i shop in the u.s. or do online shopping.