Review of ING Direct Account Setup - Week One Update

The end of week one and I have achieved a savings of $35, $5 each day for 7 days. My money is resting in my ING Investment Account while I wait for some of the other accounts like the RBC Centura account through RBC Access to be set up. I'm also going to be investigating a low cost brokerage. I haven't achieved any gain on my savings as yet, will update you on the amount of interest at the end of the month.

Setting up the ING account was relatively quick and painless. Fill out a form online, return a cheque payable to yourself. They've set up an electronic transfer with my main chequing account at Bank of Montreal. So far I've been pleased with the service, any transfers have gone through in a day or so, with a 5 day hold on the funds. I will report back on how long it takes for the funds to be returned back to me. The account is no frills, but it serves its purpose as a leave your money there for awhile account.

High Interest Savings Accounts

What to do while I wait to build up some funds? A stack of bills under my mattress won't do me much good. I went looking around for some high interest savings accounts. Most of the major banks have some kind of a higher interest option, one maybe two percent. That's not very good, the better options are high interest savings accounts from discount banks. These banks are usually characterized by having little to no storefront presence, and their business is primarily conducted online. You usually have to submit an application form, have a social insurance number, and submit a cheque payable to yourself so that the accounts can be linked. Once your account is linked you can move funds by Electronic Funds Transfer.

Some of the options out there are:

Citizens Bank Investment Account

Citizens Bank Ultimate Savings Account

HSBC High Rate Savings Account

ICICI Bank HiSAVE Savings Account

ING Direct Investment Savings Account

The plus side is that these are all CDIC insured, the only drawback is the potential for slightly lower customer service. Personally, I've opened an account earning 3% with ING, not big dollars, but somewhere to put the cash for now.

Dividend Reinvestment Programs and Direct Stock Purchase - Not So Easy For Canadians

I want to avoid brokerage costs as much as possible right now, as I would have to wait a long time to save up enough money to invest and to cover the brokerage costs. I investigated dividend reinvestment programs (DRIPs) and direct stock purchase programs. For a DRIP if you own at least one share, you can participate in dividend reinvestment through companies and their transfer agents. I found www.directinvesting.com is able to transact the one share and enroll me. Even better, in some cases with stock like General Electric (GE) you can participate in a direct stock purchase plan and buy stock directly from their transfer agent.

HOWEVER, you need to write a cheque, drawn in US funds on a US bank with a US address (Basically, the branch needs a 9 digit ABA transit number and has to be located in the US). Hmm, can't open accounts online anymore thanks to the Patriot Act and what not. No trips to the US planned in the near future. Alright, I've had an account with Bank of Montreal since I was six, maybe they can facilitate something....

"In regards to your inquiry, I can advise that, regrettably, BMO Bank of Montreal does not provide the facility you have requested. Please note that we do provide the option to open US Dollar accounts, however we are unable to set up accounts that are held at banks in the United States. I apologize for this limitation."

Well there goes that idea. I'm going to try RBC next, they have a program called RBC Access USA. It looks like it's set up for snowbirds and it looks like the accounts are held with RBC Centura bank. Not much information online, and you have to go in to the branch to set it up. Well Thursday is the day they're open late so wish me luck.