looking_for_best_rate
Nov 7th, 2009, 10:41 PM
HSBC is offering a 1% bonus interest on its TFSA high rate savings account from Nov. 9/09 to Mar. 12/10. This would bring its current TFSA high rate savings rate to 1.80%.
I view my TFSA as both an emergency account and a long-term investment account. Therefore, I would like to keep between 25% to 50% in savings and the rest in GICs/Mutual Funds/Stocks. If an emergency did arise and you needed cash right away, then you would have access to cash in a savings account so you would not have to liquidate your mutual funds/stocks at a bad time or break a GIC (assuming you can do so).
For 2009, I put $2,500 in PCF TFSA savings and $2,500 in TD e-funds. I was teased by PCF`s initial 3.75% rate and the PCF TFSA savings rate is now 0.75%. I would have to pay $50 to transfer my PCF TFSA savings to another bank. If I was to withdraw my $2,500 out prior to Dec. 31, then I would not only lose tax-free interest but the ability to add more tax-free contribution room to my TFSA contribution limit for the subsequent year (since this tax-free interest, once withdrawn, could be added in the subsequent year`s TFSA contribution). Therefore, I am stuck with PCF TFSA lousy savings rate until Dec. 31, 2009.
With non-registered savings, it is easy to move money between accounts to get the best rate. With TFSAs (and RRSPs), it is not as easy. Once your money is sitting in some financial institition`s TFSA savings account, it is stuck there for the year.
I don`t trust HSBC. They had the same promotion last year (1% bonus interest) and look at its non-registered and TFSA savings rates now. 0.80%. If you look at the entire 2009 year, it would have been better to go with CTFS or even ING. Therefore, proceed cautiously. My preference would be to go with Ally for my 2010 TFSA savings. Any thoughts.
I view my TFSA as both an emergency account and a long-term investment account. Therefore, I would like to keep between 25% to 50% in savings and the rest in GICs/Mutual Funds/Stocks. If an emergency did arise and you needed cash right away, then you would have access to cash in a savings account so you would not have to liquidate your mutual funds/stocks at a bad time or break a GIC (assuming you can do so).
For 2009, I put $2,500 in PCF TFSA savings and $2,500 in TD e-funds. I was teased by PCF`s initial 3.75% rate and the PCF TFSA savings rate is now 0.75%. I would have to pay $50 to transfer my PCF TFSA savings to another bank. If I was to withdraw my $2,500 out prior to Dec. 31, then I would not only lose tax-free interest but the ability to add more tax-free contribution room to my TFSA contribution limit for the subsequent year (since this tax-free interest, once withdrawn, could be added in the subsequent year`s TFSA contribution). Therefore, I am stuck with PCF TFSA lousy savings rate until Dec. 31, 2009.
With non-registered savings, it is easy to move money between accounts to get the best rate. With TFSAs (and RRSPs), it is not as easy. Once your money is sitting in some financial institition`s TFSA savings account, it is stuck there for the year.
I don`t trust HSBC. They had the same promotion last year (1% bonus interest) and look at its non-registered and TFSA savings rates now. 0.80%. If you look at the entire 2009 year, it would have been better to go with CTFS or even ING. Therefore, proceed cautiously. My preference would be to go with Ally for my 2010 TFSA savings. Any thoughts.