Skip to main content

The mailbox is full again, so let’s tackle some of your questions.

Virus investing

Q – Where’s the best place to invest in view of the effect the coronavirus is having? – Susan M.

A – The safe havens in difficult times are bonds and gold. Both have been doing well as investors seek shelter from economic toll the virus is taking on the global economy. Interest-sensitive stocks, such as utilities, are also performing well. If you’re looking for profit potential, consider buying shares in some of the pharmaceutical companies that are on the leading edge of research to find a vaccine or a treatment for COVID-19. – G.P.

U.S. funds

Q - I have about US$150,000 invested in U.S. stocks. This money is parked there until spring 2021. I wish to move some gradually to a more secure holding, as I will need this cash in spring 2021. I have converted some to cash but wonder what U.S. recommendations you have. On the Canadian side, you seem to suggest high interest savings accounts, but are there the some available for U.S. dollars? Are bond funds secure enough from loss? I plan to keep it the money in U.S. dollars and not convert to Canadian. Your recommendation on U.S. dollar capital preservation would be helpful. - Dwayne C.

A – Most banks offer U.S. dollar accounts, but the interest rate is usually appallingly low. The best deal I am aware of is from Tangerine Bank, an on-line subsidiary of Bank of Nova Scotia. According to its website, it is currently offering a U.S. dollar savings account to new clients that pays 2.75 per cent for the first five months. After that, it reverts to the normal rate, currently 0.25 per cent. The offer expires April 30.

You might also look at the Renaissance High Interest Savings Account, which was paying 0.95 per cent on U.S. deposits as of the time of writing. But keep in mind these rates can change quickly and are likely to do so as central banks move to attempt to counter the economic impact of the novel coronavirus.

Alternatively, look at the iShares Short Treasury Bond ETF (SHV-Q). It invests in a portfolio of U.S. Treasury bonds that mature in less than a year. That means the risk is low, but so are the returns. As of March 6, the year-to-date gain was 0.66 per cent. Over the five years to Feb. 29, the average annual compound rate of return was 1.1 per cent. However, the risk is minimal. This ETF rarely loses money and when it does the loss is fractional. The last down year was 2015 when the fund finished in the red by 0.01 per cent. The expense ratio is 0.15 per cent. – G.P.

RRSP performance

Q - I am 52 and have about $200,000 in RRSPs. I pay a company to take care of them. Last year and the year before, my return on investment was 2.9 per cent. I pay them 1 per cent. Should I have done better? - Ibn A.

A – I assume the 2.9 per cent is your compound annual growth rate over 2018 and 2019, after the management fee is deducted. If that is the case, you actually did slightly better than the TSX.

The S&P/TSX Composite Index was down 11.64 per cent in 2018. It rebounded to a gain of 19.13 per cent in 2019. If you average what happened to a TSX investment from the start of 2018 to the end of 2019, the compound annual growth rate is 2.6 per cent. By that measure, your 2.9 per cent doesn’t look too bad.

Of course, you would have done a lot better if some of your assets were in U.S. equities. If you are mainly invested in Canada, you should discuss other options with your adviser. – G.P.

RRSP cash

Q – Where is the best place to hold cash inside a self-directed RRSP? – Joe B.

A - The best RRSP rate I can find is the Renaissance High Interest Savings Account, which was paying 1.6 per cent at the time of writing. – G.P.

Tax book

Q - I’ve been investing for a while but as a non-resident of Canada. Now that I am a resident again, this is the first year that I am faced with paying more attention to investing in a non-registered account and thinking of tax implications. I want to learn more about taxes (interest, dividends, and capital gains) and I am wondering if there is a book or publication that you can recommend. – N.S.

A – Your best choice is Essential Tax Facts by Evelyn Jacks, one of Canada’s top experts in the field. The 2019 edition is currently available. The rules haven’t changed significantly for 2020 so it should provide all the information you need. – G.P.

RRSP contributions

Q - My husband will be 72 this year and has converted his RRSPs to RRIFs. We were wondering if he could still contribute to a spousal RRSP for me. I’m 65 and have not converted to RRIFs yet. – Joan M.

A - Yes, if he has RRSP contribution room available. - G.P.

If you have a financial question you’d like answered, send it to and write Globe Question in the subject line. I can’t guarantee a personal response but I’ll deal with the most interesting ones in this space.