Q: If we had $75K in an unregistered account, would it be accurate to say that purchasing an ETF like HSAV would be better than putting this money in a GIC or high interest savings account, due to the fact that there are no distributions and thus, only 50% of any income are taxable?
In other words, if I am deciding between a 6% GIC, or HSAV (which I believe has a similar yield), I would pick HSAV correct?
Are there similar ETFs like HSAV that have similar characteristics (ie do not pay out dividends) that you would prefer over HSAV?
In other words, if I am deciding between a 6% GIC, or HSAV (which I believe has a similar yield), I would pick HSAV correct?
Are there similar ETFs like HSAV that have similar characteristics (ie do not pay out dividends) that you would prefer over HSAV?
5i Research Answer:
'Better' depends on two factors. One is the investor's tax rate. But generally for most investors capital gains taxes will be well below taxes on interest income, so HSAV will result in better after-tax returns for most. The second issue is the need for a government guarantee. $75,000 falls within CDIC insurance limits, so a $75K GIC would be 100% insured. HSAV is not insured. We consider it and other high-interest ETFs extremely safe, but none are guaranteed in the sense of the word. Horizons is the only total-return ETF provider right now.