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The Money Management Newsletter: Savings
High Yield savings accounts offer great value

When was the last time you found savings accounts with rates of return higher than the many of the GIC rates offered by the major banks? Most of the time conservative investors have to make a decision as to how much of their capital to keep liquid at low savings rates and how much to tie up in fixed investments for the benefit of higher interest. The current low interest rate environment however has revealed some startling differences among institutions and their rate offerings, that make the savings account option much more appealing.

At the time of writing the posted rates for 5 year GICs at the major banks averaged 3.35% while 1 year GICs earned a paltry 2.0%. As a comparison, the two main providers we deal with for savings accounts; Manulife Bank and ING Bank had rates of 3.05% and 3.00% respectively. These savings account rates are almost as high as the 5 year GIC rates offered by the major banks with the benefit that the capital can be accessed at any time. On this basis, the high yield option is certainly worth exploring.

Are these accounts difficult to open or hard to remove funds from? Not at all. Fiscal Agents personnel can easily set up an account for you and provide face to face service for any questions you might have. Both Manulife Bank and ING Bank offer 24 hour access to account information and provide both telephone and Internet Banking services. There are no set-up or maintenance fees and funds can be withdrawn through ABMs or transferred back to your regular bank account for subsequent withdrawal. Manulife Bank even offers free chequing.

Of course there is no guarantee that these savings rates will remain high indefinitely, as they can be changed at any time. Fortunately investment options are never "all or nothing" and it makes sense to keep some capital in GICs to lock in current rates in the event they continue to fall. Fiscal Agents can be of great assistance here as well as the GIC rates available through us from a wide choice Canadian financial institutions are often significantly higher than those offered by your local bank branch.

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25 Lakeshore Road, Oakville, On L6K 1C6.
(905) 844-7700

 





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