# Alternatives to HISA



## Money172375 (Jun 29, 2018)

I’m looking for alternatives to my existing HISA 8150 paying 0.25%.

I think I’m ready to move up the risk curve a bit. The funds are an emergency cash reserve worth about 50% of my annual expenses. I have another small amount set aside for emergency roof/furnace/dental care. My income is 100% dividends so the cash reserve is fairly important.

what are your thoughts of ultra short term bond funds or short term bonds funds? Any other options to improve on the 0.25%?


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## like_to_retire (Oct 9, 2016)

Money172375 said:


> My income is 100% dividends so the cash reserve is fairly important.


You just answered your question. How much of that cash reserve are you willing to lose?

ltr


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## Money172375 (Jun 29, 2018)

like_to_retire said:


> You just answered your question. How much of that cash reserve are you willing to lose?
> 
> ltr


I could probably handle a 5% drop. From the few I’ve looked at, ultra short term bond funds haven’t had negative years. How about ZST?


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## like_to_retire (Oct 9, 2016)

Money172375 said:


> I could probably handle a 5% drop.


And I suspect that would likely be the case. 

When interest rates are at a historic low, with pretty much no-where to go but up, and knowing that increasing interest rates result in bonds losing value, your strategy is to switch from guaranteed capital of an HISA to bonds?

ltr


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## Money172375 (Jun 29, 2018)

like_to_retire said:


> And I suspect that would likely be the case.
> 
> When interest rates are at a historic low, with pretty much no-where to go but up, and knowing that increasing interest rates result in bonds losing value, your strategy is to switch from guaranteed capital of an HISA to bonds?
> 
> ltr


I understand your point, but I’m not sure rates are going anywhere in the next 12-18 months.

if We see negative rates, would bonds not go up.

havent said I’m doing anything Yet, just looking for the next step up from HISA. Or are there better HISAs....I recall a post some time ago about some different alternative. from CI?


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## james4beach (Nov 15, 2012)

ZST is an option, but it certainly comes with risk. To get an idea of the risk look at its cousin, MINT, in the US.

In the recent market turmoil, MINT declined about 5%, then ultimately bounced back to its previous level. I think ZST is similarly risky. But is it worth it? ZST is very short term corporate bonds at about 1.28% yield. That is not an impressive yield at all.

I keep cash in Outlook Financial (a MB credit union) at 1.75% and this really is purely liquid cash. I think other credit unions have pretty high rates as well.

You could also consider EQ Bank, which I think is 2.00%. I have concerns about the safety of that bank, but the deposits are CDIC eligible.

Bigger picture though, the reality is that the central bank has made the cash rate about zero. If you want better returns you should be invested in fixed income such as GICs and bond funds, as they are guaranteed to outperform cash over time. I only keep my immediate/current needs in cash, and everything else is GICs, bonds, equities.

By only keeping immediate needs in cash, I find I'm not too bothered by the low yield. Cash is a small % of my capital, just a temporary holding.

A well constructed GIC ladder can be a big help here, for example with 3 month or 6 month spacings between maturing GICs. Then you get to enjoy 5 year GIC rates and have something maturing every few months. As a result, you have nearly the same as a cash holding, but* always getting 5 year GIC yields.*


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## like_to_retire (Oct 9, 2016)

Money172375 said:


> I understand your point, but I’m not sure rates are going anywhere in the next 12-18 months.


OK, so market timing is a tough nut to crack. But yeah, if rates drop further, then that's good for bonds.

You would be far better to play the HISA game than switch to bonds. There are lots of higher rates for HISA that last for a period of time if you switch to their facility. Then you just keep switching when the introductory rate drops to the next institute that offers a better rate. It's a bit annoying, but many do it.

ltr


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## Jimmy (May 19, 2017)

Money172375 said:


> I could probably handle a 5% drop. From the few I’ve looked at, ultra short term bond funds haven’t had negative years. How about ZST?


Here is another option Horizon's active ultra ST bond ETF HFR. Duration .37, YTM 2.44% , 1.98 % after fees. I don't know how they can offer this given yields are < .5% for even 5 yr bonds.


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## Eder (Feb 16, 2011)

Not hard to beat that % rate. I moved my cash bucket to Achieva...I think last I looked it paid 2% daily interest. My income is also 100% dividends...


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## james4beach (Nov 15, 2012)

Jimmy said:


> Here is another option Horizon's active ultra ST bond ETF HFR. Duration .37, YTM 2.44% , 1.98 % after fees. I don't know how they can offer this given yields are < .5% for even 5 yr bonds.


This crashed 24% during the recent market crash. That's high risk for 2.4% yield.


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## Money172375 (Jun 29, 2018)

Thanks everyone. Was hoping to keep everything at the brokerage, but I’ll need to consider achieva and eq. Maybe some GICs Too


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## AltaRed (Jun 8, 2009)

Go to the source to be current interest rates of online banks/CUs. That is where I would go and forego any of that ST bond stuff.


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## OneSeat (Apr 15, 2020)

Money172375 said:


> Thanks everyone. Was hoping to keep everything at the brokerage, but I’ll need to consider achieva and eq. Maybe some GICs Too


Try Hubert. Excellent organisation, great communication, for rates google "Hubert rates".


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## AltaRed (Jun 8, 2009)

OneSeat said:


> Try Hubert. Excellent organisation, great communication, for rates google "Hubert rates".


Sounds like an advertisement. The OP should just go to the most up to date accurate data I provided in the link in post #12


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## alexincash (May 27, 2020)

Like others have said previously, there's nothing wrong with an HISA in your situation it's just that 0.25% is a pretty noncompetitive rate in today's market. While you could set up a GIC (or ladder) if you need access to that cash reserve it's best to not go down that route


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## james4beach (Nov 15, 2012)

Yup, just get a savings account with a better interest rate. Several credit unions have rates around 1.75%


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## AltaRed (Jun 8, 2009)

james4beach said:


> Yup, just get a savings account with a better interest rate. Several credit unions have rates around 1.75%


Several online financial institutions including banks and credit unions, some currently still in the 1.8-2.1% range.


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## Spudd (Oct 11, 2011)

I put my extra $ into a money market fund. 





CIBC Money Market Premium Class, Fund, performance | Morningstar


Morningstar Financial Research conducts Analysis on Markets, Mutual Fund, Stocks and ETFs through Investment Data and News.




www.morningstar.ca


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## AltaRed (Jun 8, 2009)

Spudd said:


> I put my extra $ into a money market fund.


In order to keep it in your brokerage account? Current return is 0.64%. CIBC Money Market Premium

I do similar with the CIBC USD Money Market fund with a paltry current return of 0.52%


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## Spudd (Oct 11, 2011)

AltaRed said:


> In order to keep it in your brokerage account? Current return is 0.64%. CIBC Money Market Premium
> 
> I do similar with the CIBC USD Money Market fund with a paltry current return of 0.52%


Yes, exactly.


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## hfp75 (Mar 15, 2018)

For cash I use Hubert HISA and CLF.

You could look at HSAV, turns your income into CG when you sell.... So really only good in a cash acct.


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