The next section of the Action Financial Group Orientation Series will deal with Investing and the various investment products or assets.
• Saving, banking, investing
• Cash and High Interest Savings Accounts (HISA)
• Guaranteed Investment Certificates (GIC)
• Mutual Funds
• Exchange Traded Funds (ETF)
Today we will deal with Cash and High Interest Savings Accounts (HISA)
Cash is money. You can hold it in your hand, in your wallet, or in a bank account. It is also what you put into any of the investment account types we outlined in the first part of our Orientation Series.
You may earn some interest on your cash while it is on deposit because your cash can be used by the financial institution where it is held in safety for you. The financial institution cannot take the cash out of your account to use it, rather your cash and that of all other customers makes up a cash balance on paper that allows the financial institution to make loans to other customers according to a certain formula approved by the bank’s regulator. The bank charges interest on these loans, and in turn they may pay you some interest on your cash balance.
Some financial institutions (banks, investment dealers, insurance companies, and others) offer “savings” accounts, sometimes referred to as “High Interest Savings Accounts (HISA)”, that pay a higher rate of interest than a basic bank account. These accounts are the most basic and least risky of “investments” because they do pay some interest, therefore meeting the definition of an asset that grows and/or earns income. HISA are highly liquid can be redeemed and the resulting cash available in one day. Many HISA are guaranteed by the Canadian Deposit Insurance Corporation (CDIC).
Stay tuned for next week’s topic. In the next section we will deal with Guaranteed Investment Certificates (GIC).
Karin Rimnyak, Certified Financial Planner®
David Dryburgh, Certified Financial Planner®
Ian Barrie, Certified Financial Planner®
This information has been prepared by Karin Rimnyak who is an investment Advisor for iA Private Wealth. Opinions expressed in this email are those of the Investment Advisor only and do not necessarily reflect those of iA Private Wealth. iA private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.