# Manulife "One" Account



## Andie01 (Sep 16, 2009)

I keep seeing TV adds about the Manulife One account. 

Does anyone have any experience or advise about this product? It just sounds like switching a conventional mortgage to a secure line of credit.


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## Jon202 (Apr 14, 2009)

http://www.canadiancapitalist.com/reader-question-on-manulife-one-account/


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## CanadianCapitalist (Mar 31, 2009)

Andie01 said:


> I keep seeing TV adds about the Manulife One account.
> 
> Does anyone have any experience or advise about this product? It just sounds like switching a conventional mortgage to a secure line of credit.


Thanks Jon for linking to my blog post.

Couple of problems with Manulife One:

1. You have to be disciplined. For many people, a gigantic line of credit will be a big temptation to draw it down for consumer expenses.

2. Monthly fee.

3. You can get a cheaper mortgage rate elsewhere compared to Manulife One.


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## RLMT (Jul 30, 2009)

CanadianCapitalist said:


> 3. You can get a cheaper mortgage rate elsewhere compared to Manulife One.



is that still the case now that banks no longer P-x mortgage rates? or have those come back in again?


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## FrugalTrader (Oct 13, 2008)

The lowest rate is P-0% right now. At this rate, it will be P-x% again in the near future..


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## CanadianCapitalist (Mar 31, 2009)

RLMT said:


> is that still the case now that banks no longer P-x mortgage rates? or have those come back in again?


Like FT points out, the cheapest variable rate mortgage today is at Prime of 2.25%. Manulife One's rate is 3.25%.

http://www2.manulifeone.ca/en/todaysrates/


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## Andie01 (Sep 16, 2009)

Thanks for the input everyone!


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## Jon202 (Apr 14, 2009)

Don't forget Crappy Tire offers the same all in one plan too:
https://www.mortgageinyourway.com

Funny, I don't see anywhere if you can pay your mortgage installment with Canadian Tire money.

CC: May be a good piece to revisit your CT article considering no Prime-% VRM exist anymore, and the CT product is in line with this.
http://www.canadiancapitalist.com/canadian-tire-one-and-only-account/

My VRM is due next year and according ot CT, I can save 20K in interest and shave 10 years off my mortgage. Now this is of course my mortgage payment is unnaturally low due to the low prime currently, so the future would be different if rates rose.


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## Sampson (Apr 3, 2009)

Jon202 said:


> according ot CT, I can save 20K in interest and shave 10 years off my mortgage.


I can understand that the marketing of these types of mortgages/accounts is appealing, but it seems people sometimes fail to realize that a traditional mortgage has as much flexibility to pay down the debt.

Assuming pre-payment priviledges of 20%, anyone could pay off their ENTIRE mortgage in 5 years if they dumped all their cash flow towards the debt. And since traditional mortgages have always had lower rates than the "All-In-One' products, all it takes is some strict discipline and you should be able to achieve the same benefits (lower interest paid, and reduced amortization).


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## brad (May 22, 2009)

Sampson said:


> Assuming pre-payment priviledges of 20%, anyone could pay off their ENTIRE mortgage in 5 years if they dumped all their cash flow towards the debt.


Well, anyone within reason. You have to have a pretty high income, a small mortgage, or very low living expenses to be able to pull that off. ;-)

In fact, though, this is the kind of approach we took with our mortgage, which is through ING Direct. We took out a 15 year accelerated mortgage with twice-monthly payments, and each year we put in extra payments. We haven't gotten anywhere close to paying 20% yet in a year (that would be about $59K), but over the past two years we've managed to pay 22% of our mortgage. So we're already down to 10 years instead of 15, and with a bit more discipline we could probably get it down to 8 years or fewer.


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## Blackaddr (Sep 19, 2009)

I bought my first house last spring and got married to my fiances a few months later. I spent a lot of time looking at mortgages including Manulife One. In the end I got pre-approved from PC Financial (always has a vary competitive variable rate similar to ING). THen went to a mortgage broker and said "I can get this at a grocery store. I expect you to do better." Got 10 basis points off and better terms.

The problem with the MO mortgage is that the savings isn't nearly as much as they make it out to be. It's really just a home equity line of credit combined with a chequing account for a monthly fee.

The interest savings by having your monthly float sit in that account is negligible.

As people mentioned, most mortgages have generous enough prepayment privleages that you are unlikely to be in the position where you've got cash to pay down but you can't because you've used up all your priv's.


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## mork (Apr 3, 2009)

I use M1 and have for years. As a product, it is what it claims to be. I do not recomend Manulife Financial based on sour customer service experiences and poor handling of rate increases when they dissociated the M1 rate from prime.

Aside from the merits, for or against, a couple of recent observations:

When we sold our house and bought a new one it was insanely easy. Kept the same account, just filled out a transfer of security form and submitted it.

It is essentially a HELOC and we've got access to a large amount of credit in our M1 account, but it doesn't show on our credit report at all.  Is this normal for HELOCs? I suppose this is a selling point if you want to double-dip on your home equity.

Crunch the numbers, use their calculator, and be HONEST with yourself. It is what they claim it is. Do be aware, the rate has no relation to prime, regardless of what they may tell you (Other banks are following suit and increasing HELOC rates as well). The monthly fee is non-negotiable, but there is a discount if you are an Engineer ($7).

I continue to like that it is "simple". I would certainly go with Canadian Tire (if it were available in SK) or National Bank's product.. I'd like to switch, but laziness always gets the best of me with that it seems (I've got direct deposits, pre-authorized debits, etc all setup there so it would be a hassle).

Also, check books are not free and the ATM network is limited.


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## whadoiknow (May 23, 2009)

http://www2.manulifeone.ca/en/home/

Having Manulife as our group pension manager at work, and being relatively pleased with fees, reporting, and fund quality, I spent some time studying Manulife One and there certainly are conceptual advantages to the idea. But really it is just a big credit wrap.

There is nothing in this that you couldn't do yourself if you wanted. Early mortgage payment discipline, leveraging home equity, accessing lines of credit etc.

For some, it may make them feel more emboldened than they really should be, and it may actually take some of the rigor out of managing the intracacies of your own finances. 

I'd approach this one very cautiously and get some independent advice before diving in.

And as one poster previously noted, convenience banking isn't easy with these folks.

But then again, whadoiknow....


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## CanadianCapitalist (Mar 31, 2009)

mork said:


> I use M1 and have for years. As a product, it is what it claims to be.
> 
> It is essentially a HELOC and we've got access to a large amount of credit in our M1 account, but it doesn't show on our credit report at all.  Is this normal for HELOCs? I suppose this is a selling point if you want to double-dip on your home equity.


I have no doubt that all-in-one accounts work. The question is: does it save most people money? I have my doubts since it is possible to get a cheaper mortgage elsewhere and conventional mortgages typically come with generous prepayment privileges.

I don't recall our mortgage showing up on our credit report either. It may be because mortgages are secured. But I don't think it would be possible to double dip. I don't know the exact mechanics but a mortgage on a property would be registered and checks will be made when obtaining another mortgage.


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## venter (Apr 10, 2009)

*Try using a Mortgage Acceleration Program*

For the lowest "effective" rate you are better off with a mortgage acceleration program like SmartEquity (in Canada). As long as you have a positive monthly cashflow and follow the program as directed, you can decrease amortisation by 1/2 or more and save a lot of money. It requires no alteration to your current cashflow. I talk about these types of accounts on my blog, see following threads:
http://financematters08.blogspot.com/2009_06_28_archive.html
http://financematters08.blogspot.com/2009_07_05_archive.html
http://financematters08.blogspot.com/2009/07/presidents-answer-to-my-question-about.html

Disclaimer: I have recently joined Home n Work Mortgages based on my impression of the SmartEquity System. For a tutorial go to the following link and click on SmartEquity Tab. If interested in an live online webinar by the creator of the software let me know, you can ask him questions directly. They run every Tues and Thurs.
http://www.tomvenner.info

The purpose of this post is NOT "to sell" anyone the product. I would like some feedback and analysis of the strength and weaknesses of this approach. I find most people have a hard time wrapping their heads around the concept of turning 25-35 year amortized interest into straight interest a chunk at a time thereby reducing the interest cost and time required to pay down the balance.


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## Elbyron (Apr 3, 2009)

After reading your blog posts, it seems to me that the SmartEquity system is just a DIY method of setting up an all-in-one account, similar to the Manulife One, the National Bank all-in-one, or the Canadian Tire all-in-one. Most of these systems involve putting your entire house loan into a HELOC, but some allow a combination of fixed mortgage and a variable-rate LOC. All SmartEquity does is gives you tools for projecting or analyzing what an all-in-one system can do for you. It isn't really required to implement an "Australian mortgage", but could be helpful if it's not too expensive. 

I already partly use this method of mortgage accelleration, by applying any savings against the mortgage (keeping track of how much) via increased monthly payments, and then borrowing the same amount back from my HELOC when I need the savings for a vacation or some big purchase. I then decrease the monthly mortgage payments in order to pay back the HELOC. It seems like I'm not really paying down the mortgage faster, but the benefit is that instead of the savings earning me 2 - 3% in a GIC, they are saving me interest equal to my current mortgage rate. 
The all-in-one accounts just take this a step further, using the balance of your chequing account (not just savings) to reduce the interest you pay. It's a great way to shorten your mortgage if you're able to make a budget and stick to it (don't spend more than you earn!). I would never pay any kind of monthly fee for this though, so Manulife One is out. If SmartEquity is trying to charge regular fees too, then it's out too. Someone could just go get a Canadian Tire or National Bank mortgage and not pay any fees at all.


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## venter (Apr 10, 2009)

Perhaps some people can but few are getting the results because they lack the proper direction. Let's look at some numbers, remember, you are not required to decrease your cashflow by making extra payments or paying more per month. 

Take a 250k mortgage at 6% for 30 years. If your monthly income is 5k and expenses (including mortgage) are 4.5k, following the SmartEquity program will pay off your mortgage in 16.4 years and save you $146,130 in interest payments. OK, so you ask what if you only have an extra $100 a month, same situation, you pay it off in 25.5 years and save $51,575. Either way the savings more than compensate for the cost of the software. Sometimes you have to look at the big picture.

Note: this program will not help you if you spend more than you make but will save you a lot of money if you have some fiscal discipline. I encourage you to watch the tutorial and try out the calculator to see how much you can save.
www.tomvenner.info (click on SmartEquity tab)


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## Sampson (Apr 3, 2009)

venter said:


> remember, you are not required to decrease your cashflow by making extra payments or paying more per month.


But isn't the surplus in your cash flow staying within the 'all-in-one' account equivalent to making a top-up payment on a conventional mortgage.

If you have 5k net income, 4.5k expenses, and use an all-in-one, what happens if I want to spend the $500 this month, then the next, then the next. The mortgage won't be paid off any sooner and no savings in interest.

Now if you don't spend the money, and keep it in the all-in-one OR if you take that $500 and make a top up payment, then you're accelerating the mortgage pay-down. So one type of account (all-in-one) has higher interest rates and monthly/annual fees, and the other (conventional mortgage) has lower rates and no additional fees - both give you the ability to pay off your debt quickly if you're disciplined.

Seems clear to me which is better.


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## venter (Apr 10, 2009)

First some background and then my standard explanation of SmartEquity (Money Merge Accounts). Although not new, money merge accounts (also known as Australian Mortgages) are new to the Canadian market. It's estimated at 35% of Australians and British mortgagee's use a Mortgage Acceleration program. Like the 15 year mortgage and the bi-weekly payment program, Money Merge Accounts pay down principal on the primary mortgage more quickly than a traditional 30 year mortgage. They just do it differently. In order for Mortgage Acceleration programs work you must spend less than you make which is known as disposable income.

Money Merge Accounts use the benefits of an open-ended mortgage to cancel interest, thereby paying down principal faster. To use a money merge account, requires a fundamental shift in the way we manage money as follows:

Assumptions: $300,000 Mortgage, $5,000 monthly net income, paid biweekly at $2,500 each paycheck. Unspent income of $500.00 per month.

1. For the money merge account to work, you must have access to an open ended line of credit know as an ALOC or HELOC (Home Equity Line of Credit). Unlike closed ended mortgages, ALOC are open ended meaning that any money that goes into these accounts, pays down Principal and cancels interest. This is distinctly different from a closed end mortgage where payments are made to interest first and principal last.

2. The ALOC or HELOC is used as your primary checking account. To take full advantage of the line of credit, each month when you get paid, deposit your paycheck directly into the checking account/line of credit (HELOC)

3. Lets' assume that you have no debt, just your house payment. You get a line of credit using the equity in your home. At the start of the HELOC, you make a principal mortgage transfer of $5,000 from the HELOC to your primary mortgage. The principal on the primary mortgage is now $295,000 and the HELOC has a balance of $5,000 for a total of $300,000. This single transfer of $5,000 shave 1.5 years off the repayment period for the primary mortgage.

4. Deposit your $2,500 paycheck into the HELOC, which you use as a checking account. This paycheck immediately lowers the Principal balance of the HELOC to $2,500, thereby cancelling interest on 1/2 of the original $5,000 balance. Pay your bills, buy groceries etc from the HELOC. The HELOC balance will climb until you get paid again 2 weeks later when the next $2,500 paycheck is deposited, again lowering the balance on the open ended line of credit and cancelling interest. As long as you keep spending less than you make, the disposable income will continue to cancel and pay down the principal balance of the HELOC. 

5. As the principal balance on the HELOC gets paid down, periodic principal transfers take place from the HELOC to the primary mortgage, thus lowering the balance of the principal mortgage more quickly and canceling interest overall.

Benefits: Interest is canceled and as equity grows on the principal balance of the mortgage, it's possible to increase the line of credit. This allows the consumer to have quick access to cash for other investments or life expenses. Much more control over your financial future and the ability to use the equity in the home for other financial and investment opportunities.

Cons: If you are inclined to spend more than you make or do a great deal of impulse shopping, you may want to rethink this strategy. HELOCs have variable rate of interest. If used as designed this interest is irrelevant, however if income decreases or disposable income decreases, the higher interest can become a factor.


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## DAvid (Apr 3, 2009)

This scheme has been soundly debated on a number of forums the best being Fatwallet.com: http://www.fatwallet.com/forums/finance/741118/ if you want to go through the 4000+ posts.

However a web search using the term United First Financial & Scam will provide many references including the respected Red Flag Deals.

The upshot is as Sampson describes. You can do as well without the software and a bit of discipline.

DAvid


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## venter (Apr 10, 2009)

First, SmartEquity is not an MLM scam and the cost is roughly half of the $3500 US figure charged by UFirst. Second, I know this is probably a more financially astute group than average. The following quote by Nate Jennings in one of the forums that debated MMA products probably sums things up best:

"For those of you saying you can do this yourself, you are absolutely correct! But the problem is that you are in the top 1/10th of 1% of homebuyers in this country as far as financial knowledge and, most importantly, discipline goes. The sad truth is that 99.9% of all homebuyers do not have the knowledge or the discipline to do this themselves. The average person, even if they understand these concepts, just will not follow through and do it. That is the true power of the MMA, not that it is some golden formula that nobody can replicate or do themselves but it helps hold the average homeowner accountable for their monthly budgeting and shows them how their spending patterns affect their finances. Without the MMA, the average person does not fully realize how spending $1k on a big screen tv can prolong the life of their mortgage. The MMA software puts their expenses right in front of their face and helps show them the consequences of their spending. It is similar to why I hired a personal trainer last year. Sure I can go to the gym and work out without one and save the money, but I am inherently lazy and will not go. I need my trainer to hold me accountable for getting there and pushing myself. "

Personally I think there is a small group of people who can do it themselves, another small group of people that would benefit from the program and the last, and largest group, that should stick to dropping extra money on their mortgage when they can or increase their payments if and when they can afford it.


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## venter (Apr 10, 2009)

One more thing and I'll call it quits on the topic. I think the key advantage of the SmartEquity program is not having to increase your mortgage payments. If you “do it yourself” it means reducing your cashflow by putting more money down on your mortgage. With an MMA you are using the “discretionary income” and money borrowed from the HELOC against the mortgage principle, thus leveraging the banks money to your benefit. In exchange, you are paying a small amount of interest on the money you borrowed (even though you cancel most of it with your income) to substantially reduce your mortgage interest payments. It should be noted that most people do not have large chunks of money (that the HELOC provides) available to them to apply against the principle. You use your monthly income to replenish the HELOC and start the procedure over again. Remember, if you ever need access to that money, it's there. Your money (and equity) is always available to you within the line. If you were to do what some people advocate, paying your extra discretionary income against the principal each month, you would be broke. Instead the software shows you haw to use the banks money against itself. Thats why there is little or no change to your lifestyle. You live your life the way you do now, just filtering your income to the HELOC instead of your checking account.


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## Elbyron (Apr 3, 2009)

I think you're missing what the "do it yourself" approach means. It's not about applying your discretionary income against the principal. It's getting your own all-in-one account such as the Manulife "One" account that this thread is about, or an alternative like National Bank all-in-one or the Canadian Tire "One-and-only" account that don't charge monthly fees. The concept is identical to the MMA system, and does not require any knowledge or expensive software to implement, just smart budgeting. 
The point I'm trying to make is that these outrageously priced programs are nothing more than glorified budgeting software, and probably not as fully featured as other programs like Quicken or Microsoft Money. You argue that the software helps hold the homeowner accountable for thier expenditures, like a personal trainer (except that people are less likely to listen to their computers than they are to a real person). But that's really the purpose of ALL budgeting software. It doesn't make sense to shell out thousands for SmartEquity when I can get a one-and-only account and some budgeting software that costs between $0 - $100 (yes, there are decent free budgeting programs).


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## Shayne (Apr 3, 2009)

*This is right from the Home N Work Web Page*

Q: Can I do this Program without the software?

A: Yes you can, but without a roadmap you can end up anywhere. Imagine two people in a foreign country where they don’t speak English and they need to get to a certain part of the Country. One person doesn’t have a road map, the other person has a GPS guiding them every step of the way. One person may never reach their destination while the other will not only reach their destination but will do it in record time. Think about all the people that end up refinancing their home every 5-8 years and still never pay off their home. Using our system, they pay down their mortgage faster without changing their spending habits. It is all about using a focused approach with supervision! The mortgage consultant will set you up, and even work with your financial advisor, to ensure that you are successful.

$2,000 for a road map is a little expensive.


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## venter (Apr 10, 2009)

Elbyron, my "do it yourself" comment was not directed at you but at some of the naysayers I have come across that say anyone can simply do the same thing with a spreadsheet. I agree that Manulife One is a great product for the 10% of Canadians that are disciplined. I just think SmartEquity is another option that some people might benefit from. Because I am a Financial Planner (CFP) and a Mortgage agent I get to explain both concepts to clients, they can decide if they find either one appealing. I try not to "sell" anybody on either product, just educate them about their choices. Thanks for the reasoned responses, many people just seem to lose their minds when it comes to this topic.


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## Elbyron (Apr 3, 2009)

I love the line "using our system, they pay down their mortgage faster without changing their spending habits". But you can easily do the same and not fork out $2,000!
Let's continue the analogy: I arrive in a foreign country and decide to buy a GPS to help me get around, and I walk into a store and see various models for sale. Most of them are a few hundred dollars, but one of them is selling for $2,000 and advertises all kinds of claims about the things you can do with it - when really all the other models do the same things. I'm a smart consumer, and won't be fooled by this advertising. I buy a sensible model for $150 and make my way to my destination with no trouble at all.


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## Shayne (Apr 3, 2009)

Hi Tom,

As I have mentioned to you before I believe this is advice you should be offering to your clients for free. Point them to www.vertex42.com and download a mortgage calculator that will track their payments, extra payments and balance. 

Once people get educated about what their mortgage interest truly costs them that will be motivation enough for most.

The goodwill you will earn will be worth more than the $2K in the long run!


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## venter (Apr 10, 2009)

Shane, I have no control over the cost of the software. If a client ends up saving 50k or more, the 2k becomes irrelevant. If you buy a home gym for 2k and never use it, you wasted 2k. However, if you use it regularly and follow the plan laid out in the instructions, you will probably end up in great shape and not regret spending the money. Probably not the best analogy, I suppose if I had more time I could come up with a better one.


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## Shayne (Apr 3, 2009)

venter said:


> Shane, I have no control over the cost of the software. If a client ends up saving 50k or more, the 2k becomes irrelevant. If you buy a home gym for 2k and never use it, you wasted 2k. However, if you use it regularly and follow the plan laid out in the instructions, you will probably end up in great shape and not regret spending the money. Probably not the best analogy, I suppose if I had more time I could come up with a better one.


Fair enough about the cost, but you get virtually the same thing at www.vertex42.com for free. You should take a look at the spreadsheets there. I used them to compare your costly program to the DIY, maybe you will see the light. DIY comes out ahead!

You can educate your clients without the added expense.


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## venter (Apr 10, 2009)

BTW, I have never sold this product to anyone. I just received my Mortgage Agents license recently. Home n Work Mortgages is the brokerage I work through and SmartEquity is offered through them. All agents have the same websites and SE is part of the deal. We are required to tell them about the SE option, much like we must offer them mortgage insurance (but I can also tell them about the advantages of term life, dissability or CI as I am Life Licensed). None of my Financial Planning clients have Man One either. I explained the concept to a few clients when they bought homes but they were not interested.


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## Shayne (Apr 3, 2009)

Hi Tom,

I did take the time to go through your blog and a $75 annual fee??? I understand this will be justified that you are providing professional advice but telling someone that they don't need a brand new car or a 90 inch TV isn't exactly professional advice. 

Sorry if it seems like a personal attack on you, it isn't. I just can't support the product. You wanted the feedback and in my opinion a CFP should be able to guide their clients without the software. 

As you have read, this is my short post on these programs:

http://www.debtfreeby43.com/2009/06/21/pay-off-your-mortgage-in-12-the-time/


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## venter (Apr 10, 2009)

No worries Shayne. as I stated, I am new to the Mortgage side of things and have been placed in a situation where I am obligated to present the pros and cons of this product to clients. However, I have an ethical obligation to explain the other options available to accelerate paying down their mortgage. While I can see SmartEquity befitting certain types of people I fully understand the resistance many have to the product, particularly the cost.


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## FeeOnly.ca (Jun 4, 2009)

When it comes to overall banking arrangements your "time" is a factor.

I see inefficient banking processes all the time and the better managed money often requires constant attention and activity on the part of the individual to come close to the utility of the M1account or others like it. 

Are they ahead? I don't know, what is their time worth and I'll figure it out.

The efficient management of cash flow, relatively high return on any balance, and access to reasonably priced credit/capital all provided in an all-in-one tool is attractive to me as planner. That is why I have an M1 account.

Typically people won't spend much time trying to improve their banking processes. That is a waste. These processes, lines of credit, loans, saving & chequing accounts are often accumulated over a very long time in a fragmented and disjointed fashion. Usually they are anything but easy or efficient.

What is your time worth, and how much time do you spend on banking in general including credit arrangements, looking for competitive rates, moving money around and tracking interest cost? 

Is all that time not worth more than the annual fee which is less than $200? 


To me it looks like a reasonable deal overall, it is simple and can save you a great deal of time.


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## Jolga (Jan 24, 2010)

*Manulife One Question For The best and Brightest*

We have just purchased a retirement home in Panama. The whole thing will probably total approximately $180,000 in US funds.
As construction progresses (over the next 12-18 months) we will be making US dollar payments.

We have already given an intial deposit of US $25,000 

We are not sure which of the following strategies to use:

1) Watch the Canadian dollar carefully and when/if it goes above a dollar US withdraw the remaining $150,000 + from our Manulife account and transferr to our Scotiabank US account, thereby saving us from any currency fluctuation hits. Of course, from that moment we will begin to incur The Manulife One interest charges of 3.25 for 12-18 months.

2) Pay the various deposits as construction progresses at whatever the US-Cdn exchange rate is at the time, but of course having lower interest charges on our Manulife margin over the 12 - 18 month construction timeline.

Thanks to your B&B for helping to resolve our dilema


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