Too Much Cash
I have $10,000 in my savings account right now. I'd like to keep at most $5,000 in cash realizing that I am sacrificing a potentially higher return if I keep more than 2 months of living expenses in cash. The consequence of saving $2100 each month is that every 2 months I need to look for an investment option that is going to earn me a decent return. In the next 6 months to a year, I am expecting to have some large purchases as I get closer to buying a home and will have to start shelling out some cash for my upcoming wedding. I'm therefore looking for a liquid investment, with an investment horizon of 6 to 9 months. I'm not considering ETFs other other equities given the short time period, and there is a great risk that I wouldn't even recover $29 in and out brokerage fees.
Some options I have:
- Current PC Financial Account - paying 2.9% interest - no liqudity restraints
- ING Savings Account - paying 3% interest - no liquidity restraints
- 90 Day ING GIC - 3.4% - low liquidity restraint
-180 Day ING GIC - 3.5% - medium liquidity restraint with only a 0.1% benefit
- Bankers Acceptances - 0 to 90+ days - 3.25% to 3.55%
- T bills - 30 to 90 days 3% to 3.4%
- Corporate Bonds - GM Mtge Note Bond, 3.8% 9/22/06 with a yield of 7.314%.
- Other corporate bonds with Dec 2006 maturity - 3.6% - 3.8% yield
Basically, on what I would call the "safe" investments I'm goign to get 3 to 3.5%. Clearly nothing to get excited about. But, I'm getting nervous even thinking about investing in GM even the yield is definitely attractive. It has a BBBl DBRS rating and Ba1 Moodys rating. Do I think they are going to go bankrupt by September? Probably not, but I don't think I'm willing to take the risk. For now, I will put the money into my ING account and continue to look for a better alternative.
3 Comments:
Hi,
Have you looked into the Achieva high interest savings account? Redflagdeals has a comparison of the high interest savings accounts.
http://www.redflagdeals.com/deals/main.php/articles/savings2/
My pick is Achieva. It has the highest interest rate of 3.5%, and you can deposit at most credit unions for free.
http://www.achieva.mb.ca/products/index.asp
Also, you can withdraw once per month for free, no minimum. I'm opening mine later this month.
Also - have you looked at the Altamira Cash Performer. It's a mutual fund - but it provides a return similar to an excellent savings account - and is no load.
This is where I'm parking my money (as I don't want the hassle of setting up another savings account elsewhere)
Thanks for the ideas. While the Achieva account looks appealing, I'm hesitant to set up yet another bank account(i'm already at 3 institutions).
I'm definitely interested in the Altamira cash account(both the Cdn and US). Since these can be purchased easily from my trading accounts with no brokerage fees this seems like a great no hassle solution. Actually, a client of mine invests in it and at the time I was reviewing their accounts, I intended to read up on it for my own personal accounts. Thanks for the reminder!
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