Q: Hi group want to park some $ in high interest saving account I have 2 question's )
- How is the return calculated ( as an example PSA pays out dividend monthly monthly does that mean if i cash out in the middle of the month that i do not get a pro rated amount based on my balance. Could you explain how that works. is it a daily calculation payable at the end of the month or what.
- if i buy a US high interest account would that be a benefit for a higher return compared to buying a high interest Cad saving acct.
- could you provide some actual comparisons using real returns and currency numbers
thanks for your help with this.
- How is the return calculated ( as an example PSA pays out dividend monthly monthly does that mean if i cash out in the middle of the month that i do not get a pro rated amount based on my balance. Could you explain how that works. is it a daily calculation payable at the end of the month or what.
- if i buy a US high interest account would that be a benefit for a higher return compared to buying a high interest Cad saving acct.
- could you provide some actual comparisons using real returns and currency numbers
thanks for your help with this.
5i Research Answer:
PSA accues interest daily, but pays only once a month. It trades like a stock. If an investor sells any time they get the market price. They would still get the distribution if they sold on or after the ex-dividend date. For example for January the ex-dividend date was Jan 29. If an investor sells before that they do not get the January dividend. If they sell after then they do.
US rates are typically higher right now, but there is variability. An investor in a US high interest account will take on currency risk as well. There are too many different ETFs to compare, but the C$ has declined about 9% vs the US$ in the past year, and this would have made a US$ ETF far more profitable to a Canadian investor over that time frame.