You're Leaving Money On The Table

The topic today is especially important for business owners, however, many of you could also benefit - so pay attention!

Everyone knows interest rates in Canada have increased rapidly to start the year. It's caused worry over mortgage payments, lines of credit, and even their investments. The last interest rate increase of 100bps (1%) by the Bank of Canada has been the largest rate increase in the last 20 years, and they are expected to deliver another 75bps (0.75%) increase in early September. (Source: CBC) 

The current Bank of Canada rate sits at 2.5% (See below)



While it sounds negative... the positive aspect of this is you can start earning higher and higher rates of return on cash. Business owners with larger amounts of working capital, individuals who have cash and are waiting for opportunities - this is perfect for you. Over the last couple of months I've helped a number of clients increase their monthly interest simply by providing a better interest rate on savings accounts or GIC's. 

Think about this... imagine you have $500k inside your corporation and you have some plans to purchase equipment with the cash, but maybe these plans will take another 6 months. AT A MINIMUM, you could be earning 2.5% on this cash in a high interest savings account. After all, this is the rate that banks are borrowing and lending to each other. 

2.5% on $500,000 is an additional $12,500 annually, or $2,500/year for every $100,000 you have in cash.

What's the problem? Financial institutions aren't passing this rate onto you.

Here are a number of institutions and their rates on "High Interest" Savings Accounts:


Source: TD Canada Trust, National Bank, Simplii Financial, Tangerine, Wealthsimple. Interest rates are the standard rates without promotions, in some cases averaged across deposit amounts at National Bank.

We can provide a minimum 2.5% annualized rate for savings on CAD and USD cash through high interest savings products. This is one of the simplest solutions for you to start earning extra interest.

Recently we were able to offer a client a higher rate on a savings product than their bank was giving them on a 1 year GIC.  And they have access to cash on a daily basis.

And the best part??? Every time the bank increases rates further, the interest rate goes up in accordance with the Bank of Canada rate increase. 

Don't wait! Reach out to us now to see if we can provide an increased interest rate for you.

GIC's...

As a quick reminder to everyone, we offer GIC's as well. The benefit we provide here is we can shop around the best rate for you on a daily basis. No more sticking with one institution that provides you a subpar rate. Whatever institution provides you the best rate, we can provide that rate for you.

This includes the following types of GIC's shown below.



That's it! If you're looking for short term alternatives or want to start earning some extra interest on your cash, please reach out as I would love to help. Next month I will be doing a video on investing inside a corporation, and why maximizing tax efficiency inside your corporation is so critical. 

Jonathan Adomait
Financial Advisor | CFP, B.Eng