In Canada at least you can have the funds pulled from the market and put in cash hold until you are comfortable with the market for RRSP/RESP.
Some banks will try to tell you you cannot do this or will charge you $100/month to keep it in cash. If they do, go to another institution and get it moved there. Many credit unions offer the same accounts with zero charges for holding cash.
Eh? Term deposits/GIC savings vehicles generally just generate interest for the depositor, without fees involved. Demand accounts like chequing accounts / payment oriented accounts, will sometimes have a fee, which will typically get waived if the amount in that account exceeds a certain value (typically around $1000-1500). Been that way forever at CUs. It’s generally because they can use that capital to fund loans, more confidently, if the money’s locked in to a term deposit for a set period – in a simple small CU setup, they’re essentially taking all those deposits, pooling them together to help people buy homes, and charging the borrowers enough to pay both the deposit interest and the CUs operating costs. There’s very little ‘risk’, given that any loan is secured by property, with a loan to value ratio of around 75-80% at the high end – something regulators seem oblivious to at times in Canada, as many cripple industry without cause. They’re actively working to kill small CUs, while also whining federally about a lack of financial industry competition.
But back on topic, I think the posters comment is more trying to imply that all assets/money is a bubble. I’m not really sure why. But whether you have money in property/assets, or money sitting in an account, it’s part of “the entire financial system” that the poster says is a giant bubble.
I’m not a financial expert here, so some of the things you hit on in your reply I am not familiar with. I’ve never used GICs. RRSPs however can be invested, or sit in cash non-invested. Its the same account type either way.
Some, like BMO Investorline, will charge for it to sit in cash (Investorline charges you $100/month) - BMO Smartfolio won’t let you put things in cash, they say they aren’t setup for that.
I ended up moving my RRSP to an RRSP with my credit union. Its getting moved to an RRSP but it will sit in cash hold, uninvested, until such time as I am ready to put it back into the market. I did this before the 2020 dip as well. You can avoid the bubble popping this way. It doesn’t need to stay on the market.
So to the OPs broader point, you’re still participating in the broader financial system/market – the financial system doesn’t “just” refer to items placed on the stock market, it includes any money stored in a financial institution, and ultimately even ‘money’ itself. The OPs position sounds a lot more like a libertarian / anarchist take, stating that all ‘money’ is essentially a bubble with imaginary value. I imagine this sort of mindset is increasingly on the minds of people, Americans in particular, as international trade starts to flounder – the value of the US dollar is, in some circles, starting to cause concern. I think there was a news piece from one of their central bankers a couple days ago, commenting that the value of the American dollar is down 10% against other currencies this year, so if your net worth hasn’t gone up by 11% you’ve taken a loss. Currency values are arguably based on difficult to quantify things – it can be viewed as bubble-like at a fairly fundamental level.
For the RRSP item, typically banks/CUs provide parent accounts and sub accounts, in my experience. So, for example, you can have an RRSP account at a CU which has just cash sitting in it, or that RRSP can have a sub-account Term deposit where the cash is locked in for 5 years and earns 2-4% per annum in interest (essentially just keeping up with inflation) – or an RRSP parent account with a trading sub account. Terms have lower return than the market, in general, but less risk. I’ve personally tended to split my savings between longer Terms in the RRSP for long term retirement needs, shorter more numerous Term Deposits in non-RRSPs that I can cash in for emergencies (taking a small hit if I break the term early), and a Market investment account I handle through my TFSA for now – not really sure if that’s a good approach, but it spreads the risk profiles around, and ensures that I have a baseline of emergency funds available.
In terms of interest rates / fees, if money is locked in for a longer period FIs generally don’t charge fees, and instead you earn a higher interest rate. The BMO Investonline example, I would guess, is a result of that money getting booked differently in terms of their ability to leverage it for lending, and/or it’s shunted over to a BMO subsidiary entity setup to specifically handle market actions, which is subject to different standards/fee structures. I’ve worked at banks/CUs that did that sort of thing for departments like their auto-leasing programs – which was fascinating, as the CU actually had policies in place not to lease cars to their regular financial members, because they were totally fleecing the auto side and knew it (which was deemed ‘ok’, so long as those people aren’t members/can’t vote in elections). There were also likely larger regulatory hurdles if they were to try and cross sell that sort of product.
But the long and short of all this, is basically just … if you’re storing a pile of money in a bank/CU, stick it in a term deposit so that it at least keeps up with inflation / earns you interest, rather than costs you in fees. As an added benefit, moving those funds into a non-demand account makes them a lot more difficult for scammers to get at – because the money isn’t available “on demand”.
Though again, if I’ve interpreted the Ops sentiment correctly, none of this matters from their POV, as it’s all just a house of cards.
I mean, in the case of changing values of currency, physical money isn’t changing anything there. As a Canadian forced to buy many things in USD I am constantly suffering from exchange rate changes which is similar. Money retains the same value in country though unless something goes really wrong at the bank of Canada. This is riskier because of trade and how interdependent nations are today.
In Canada at least you can have the funds pulled from the market and put in cash hold until you are comfortable with the market for RRSP/RESP.
Some banks will try to tell you you cannot do this or will charge you $100/month to keep it in cash. If they do, go to another institution and get it moved there. Many credit unions offer the same accounts with zero charges for holding cash.
my fellow human, that strat may not be enought
Eh? Term deposits/GIC savings vehicles generally just generate interest for the depositor, without fees involved. Demand accounts like chequing accounts / payment oriented accounts, will sometimes have a fee, which will typically get waived if the amount in that account exceeds a certain value (typically around $1000-1500). Been that way forever at CUs. It’s generally because they can use that capital to fund loans, more confidently, if the money’s locked in to a term deposit for a set period – in a simple small CU setup, they’re essentially taking all those deposits, pooling them together to help people buy homes, and charging the borrowers enough to pay both the deposit interest and the CUs operating costs. There’s very little ‘risk’, given that any loan is secured by property, with a loan to value ratio of around 75-80% at the high end – something regulators seem oblivious to at times in Canada, as many cripple industry without cause. They’re actively working to kill small CUs, while also whining federally about a lack of financial industry competition.
But back on topic, I think the posters comment is more trying to imply that all assets/money is a bubble. I’m not really sure why. But whether you have money in property/assets, or money sitting in an account, it’s part of “the entire financial system” that the poster says is a giant bubble.
I’m not a financial expert here, so some of the things you hit on in your reply I am not familiar with. I’ve never used GICs. RRSPs however can be invested, or sit in cash non-invested. Its the same account type either way.
Some, like BMO Investorline, will charge for it to sit in cash (Investorline charges you $100/month) - BMO Smartfolio won’t let you put things in cash, they say they aren’t setup for that.
I ended up moving my RRSP to an RRSP with my credit union. Its getting moved to an RRSP but it will sit in cash hold, uninvested, until such time as I am ready to put it back into the market. I did this before the 2020 dip as well. You can avoid the bubble popping this way. It doesn’t need to stay on the market.
So to the OPs broader point, you’re still participating in the broader financial system/market – the financial system doesn’t “just” refer to items placed on the stock market, it includes any money stored in a financial institution, and ultimately even ‘money’ itself. The OPs position sounds a lot more like a libertarian / anarchist take, stating that all ‘money’ is essentially a bubble with imaginary value. I imagine this sort of mindset is increasingly on the minds of people, Americans in particular, as international trade starts to flounder – the value of the US dollar is, in some circles, starting to cause concern. I think there was a news piece from one of their central bankers a couple days ago, commenting that the value of the American dollar is down 10% against other currencies this year, so if your net worth hasn’t gone up by 11% you’ve taken a loss. Currency values are arguably based on difficult to quantify things – it can be viewed as bubble-like at a fairly fundamental level.
For the RRSP item, typically banks/CUs provide parent accounts and sub accounts, in my experience. So, for example, you can have an RRSP account at a CU which has just cash sitting in it, or that RRSP can have a sub-account Term deposit where the cash is locked in for 5 years and earns 2-4% per annum in interest (essentially just keeping up with inflation) – or an RRSP parent account with a trading sub account. Terms have lower return than the market, in general, but less risk. I’ve personally tended to split my savings between longer Terms in the RRSP for long term retirement needs, shorter more numerous Term Deposits in non-RRSPs that I can cash in for emergencies (taking a small hit if I break the term early), and a Market investment account I handle through my TFSA for now – not really sure if that’s a good approach, but it spreads the risk profiles around, and ensures that I have a baseline of emergency funds available.
In terms of interest rates / fees, if money is locked in for a longer period FIs generally don’t charge fees, and instead you earn a higher interest rate. The BMO Investonline example, I would guess, is a result of that money getting booked differently in terms of their ability to leverage it for lending, and/or it’s shunted over to a BMO subsidiary entity setup to specifically handle market actions, which is subject to different standards/fee structures. I’ve worked at banks/CUs that did that sort of thing for departments like their auto-leasing programs – which was fascinating, as the CU actually had policies in place not to lease cars to their regular financial members, because they were totally fleecing the auto side and knew it (which was deemed ‘ok’, so long as those people aren’t members/can’t vote in elections). There were also likely larger regulatory hurdles if they were to try and cross sell that sort of product.
But the long and short of all this, is basically just … if you’re storing a pile of money in a bank/CU, stick it in a term deposit so that it at least keeps up with inflation / earns you interest, rather than costs you in fees. As an added benefit, moving those funds into a non-demand account makes them a lot more difficult for scammers to get at – because the money isn’t available “on demand”.
Though again, if I’ve interpreted the Ops sentiment correctly, none of this matters from their POV, as it’s all just a house of cards.
I mean, in the case of changing values of currency, physical money isn’t changing anything there. As a Canadian forced to buy many things in USD I am constantly suffering from exchange rate changes which is similar. Money retains the same value in country though unless something goes really wrong at the bank of Canada. This is riskier because of trade and how interdependent nations are today.