Tag: savings

What’s included in your “retirement bucket”?

RobHLeave a comment

My monthly retirement salary is calculated using a methodology called Variable Percentage Withdrawal, or VPW for short. You can read about the methodology over here, and you can follow an excellent real-time illustration of how it works over at https://tinyurl.com/vpwForwardTestFiniki.

Part of the “how it works” is calculating your total retirement savings on a monthly basis. For me that includes the real-time value of:

  • 5 different RRIF accounts (3 for me, 2 for my spouse)
  • 2 TFSAs (1 for each of us)
  • 3 non-registered accounts (one for me, one for my spouse, one that serves as VPW’s cash cushion)

But what’s not in it?

  • My day to day chequing accounts
  • A rainy-day savings account
  • A tax savings account
  • A short term investment account

Since I’m continually talking about what’s in my retirement portfolio (most recently here), I figured a few words of other assets I have might be helpful.

My day to day joint chequing account

This is the account my spouse and I use for day to day banking. It’s an account we’ve held at CIBC for decades. It’s the kind of account that charges no fees as long as a minimum balance is maintained. It doesn’t pay any interest on balances. I could still conceivably use it to write physical cheques, but I can’t remember the last time I used it for that. Like most day to day banking, it has inputs and outputs:

  • Inputs: RRIF payments, payments from my non-registered retirement accounts, my spouse’s salary, eTransfers
  • Outputs: Most bill payments (subscriptions, utilities, insurance, credit cards, taxes, charitable donations), eTransfers, transfers to other accounts

As I build my relationship with Wealthsimple, some of the day-to-day duties are being shared — depending on cash flow I will sometimes pay bills from Wealthsimple, and if my CIBC balance gets too high (not often, but it does happen sometimes) I will move money from CIBC to Wealthsimple since Wealthsimple pays interest and CIBC does not. And if I’m traveling in a foreign country, the Wealthsimple credit card comes into play1, and balances for this card need to be paid from a Wealthsimple account.

My rainy day savings account

Every month, without fail, I redirect some funds to my rainy day savings account2. This is a separate account that pays interest. The rainy day fund pays for unexpected (but never ending) expenses. These could be car related (major repairs), house related (renovations, repairs), or sometimes a large splurge (vacation related). There isn’t a hard and fast rule as to when to apply rainy day savings, but a good starting point is when the cash flow of the joint chequing account looks like it’s heading to dip below the threshold where bank fees start getting paid for day to day banking. I hate all banking fees. Discretionary3 spending from the rainy day account is a joint decision.

My tax savings account

Every month, without fail, I direct some funds from my chequing account to the tax savings account. As a retiree, my only income comes from

  • Monthly RRIF minimum payments, which get no special tax treatment4. It’s like income. The big difference between a RRIF paycheque and a salary paycheque is that a typical salary paycheque has tax withheld at the source, CPP payments, EI payments… A RRIF paycheque has none of that.5
  • Payouts from my non-registered accounts, which also don’t come with any withholding tax. Every payout typically6 generates a capital gain and even with a 50% tax break on capital gains, it adds up!

So yeah, there’s a good chunk of income coming in (all flowing in to my day to day chequing account) but no taxes. So to cushion the blow in April, I’ve set aside funds to pay the looming tax bill. And for simplicity, I keep this separate from other accounts so there’s no temptation to “borrow” from it or to “forget” to make a payment. Payments are automated, direct from the chequing account every month. Wealthsimple makes this sort of thing quite painless to set up. And it’s a straight savings account, paying a small amount of interest, about 50 basis points below Bank of Canada overnight rate.

Short term investment account

This is something I’ve set up after getting a small inheritance. I haven’t decided what to do with this money, but while I think about it, I have it invested in an account with a reasonable return without taking on too much risk. It’s like the rainy-day fund, but with a likely longer time horizon.

The firewall between retirement savings and everything else remains in place. But everything else is a bit more complex than you might expect at first glance!

  1. No FX fees when I use this card. One of three I carry, which I talked about lately. ↩︎
  2. There’s actually a few of these held at different providers (Wealthsimple, Simplii) at the moment; this needs to be consolidated. ↩︎
  3. Renovations that aren’t urgent, for example. ↩︎
  4. I’m ignoring the fact that if you’re over 65 (I’m not) then you can split RRIF income with your spouse however you like. Because I planned ahead, my spouse and I are both the same age, and have very nearly the same RRIF value saved up, so even once I turn 65, the splitting may not be needed. ↩︎
  5. To clarify, if you take RRIF minimum payments (as I do) then there is no withholding tax. If you take more than RRIF minimum, then there is, and the amount withheld will depend on how much above the minimum you go. Full and complete rules outlined by the CRA (prepare coffee before reading). ↩︎
  6. A lot of the things I hold in my non-registered account I have held for a long time. And since it’s mostly boring index funds (I covered what’s inside a while back), they tend to increase in value over time. ↩︎

The HISA table April 2025

RobHLeave a comment

Summary: High Interest Savings Accounts (HISAs) are a way for cash to earn half-decent, risk-free interest. These “Series F” HISAs are likely available through your online broker, but you may have to ask how to get at them, exactly.

We talked about HISAs in February over here if you need a quick reminder: https://moneyengineer.ca/2025/02/14/earn-money-with-your-cash-the-hisa-table-february-2025/

On March 12, the Bank of Canada reduced their overnight rates by another 0.25%.1 Unsurprisingly, this had a knock-on effect to the interest rates provided by the series F HISAs I track.

Equally unsurprisingly is that the US Federal Reserve didn’t touch their rates, and as a result, there were no changes in the HISA rates paid out for USD accounts. Here’s the full breakdown:

Current HISA rates for HISAs available via QTrade

There’s also a Google Sheets version with a bit more detail (source links) if you prefer.

For Canadian Dollar HISAs, B2B bank remains top of the heap: https://b2bbank.com/advisor-broker-rates/banking-rates.

For those of you who hold US cash in your brokerage accounts, you can benefit from the much higher US interest rates, and you have multiple choices since multiple providers are paying the same rate.

  1. You can also say “25 basis points” if you want to impress your friends ↩︎

Earn money with your cash: The HISA table February 2025

RobH10 Comments

Summary: High Interest Savings Accounts (HISAs) are a way for cash to earn half-decent, risk-free interest. These “Series F” HISAs are likely available through your online broker, but you may have to ask how to get at them, exactly.

The high interest savings account (HISA1) is a different animal than the bank accounts offered by the likes of Simplii, Tangerine, EQ, or Wealthsimple2. The bank accounts are more intended for very short term savings for day to day use. They frequently offer attractive promotional rates for new clients. And while these are all good ways to earn a few extra bucks on cash in your account, it’s not the focus here.

The HISAs I’m talking about are usually only offered via a broker, and many of the DIY brokers3 allow you to purchase the so-called “Series F” version of these, which do not have any hidden trailer fees. They are “special” bank accounts insured by CDIC4 that pay rates that are tied to the overnight rates. When those change, expect the HISA rates to follow suit.

There was a mini-explosion in ETFs that invested in HISAs: CASH and HISA are two examples5. I never bothered with these since they weren’t free to trade on QTrade and trading costs would be a significant drag on the ROI.

Part of my investment philosophy is to have 5% of my overall holdings in cash (as for the rest, it’s 15% in bonds, 80% in Equity). And so I’m quite motivated to have some sort of real return6 from my cash position since it is a measurable part of my net worth.

So I do pay attention to the ups and downs of the HISA rates. And I figured I’d share them with you:

Current HISA rates for HISAs available via QTrade

There’s also a Google Sheets version with a bit more detail (source links) if you prefer.

Hopefully most of the fields are self-explanatory. The “fund” column shows the identifier you would need to use to actually trade the HISA on your trading platform. How to access it will vary by provider. QTrade hides their HISAs in the “Mutual Fund” tab which is incorrect; these are not mutual funds, but are often modeled that way in the DIY platforms.

For Canadian Dollar HISAs, Scotiabank7 has been usurped! They have long been the highest-paying provider but the title now falls to B2B bank: https://b2bbank.com/advisor-broker-rates/banking-rates.

For those of you who hold US cash in your brokerage accounts, you can benefit from the much higher US interest rates8, and you have multiple choices since multiple providers are paying the same rate.

Before taking the leap and trading in HISAs, I was surprised by how they were handled on QTrade. There were a few differences possibly specific to QTrade, but pay attention to how your provider handles HISA trades:

  • QTrade considers holdings in HISAs part of your cash position for the purposes of buying stocks and ETFs9. If you successfully complete a trade that exceeds your ACTUAL cash position (i.e. cash NOT in the HISA) you will also have to sell the correct amount of your HISA to get rid of the negative cash balance in your account and avoid interest fees
  • HISA trades are not tracked in the “orders” tab of QTrade10 so be careful that you don’t inadvertently trade the same thing twice
  • QTrade limits all HISA purchases to $1000 minimum; there are no restrictions on sales, and there are no fees for either buying or selling HISAs.

Does your DIY broker give you access to other funds? Let me know about them at comments@moneyengineer.ca!

  1. An aside about the image chosen for this post…I pronounce the acronym HISA….and it’s on a TABLE, get it? ↩︎
  2. Looking at these websites, I may have to consider breaking up with CIBC for my day to day banking… ↩︎
  3. QTrade and iTrade definitely allow you to purchase these. Wealthsimple and BMO Investorline do not. Wealthsimple as a matter of course offers pretty competitive rates for any cash floating around in your account, especially if you have over $500k with them. BMO Investorline has high interest savings too, but you access to their product only (BMT104). ↩︎
  4. My personal bias is that I don’t much pay attention to CDIC-insured or not. I figure if major Canadian banks start failing, I had better make like Survivorman, because no insurance is going to save me. Perhaps that’s naive. ↩︎
  5. Great names for both, by the way ↩︎
  6. That’s return above the current inflation rate. Hiding money under a pillow would typically earn a negative real return, equal in magnitude to the current inflation rate. ↩︎
  7. All my cash holdings are in DYN6004 or DYN6005. ↩︎
  8. US Fed has not been as aggressive in cutting interest rates as compared to Bank of Canada. ↩︎
  9. Since I don’t have a margin account, if I try to buy something I don’t have the money for, I’m normally strongly discouraged from doing so with a clear warning. ↩︎
  10. BMO Investorline is the king of confusing handling of cash positions in your account. ↩︎