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intelligence is still in place today. ... cibc investment set aside receipt check balance mortgage "car loan" "student loan" &quot ...

TD Dividend Growth Fund

A bottom-up stock picker, Warwick favoured financial services stocks going into the crisis. Last winter he used cash to add to existing holdings, such as Royal Bank of Canada, Bank of Nova Scotia, CIBC and Bank of Montreal. Financials account for about 56% of the fund. Significantly, while BMO and CIBC are widely regarded as turnaround situations, each accounts for about 8% of the fund. "Because Canadian banks are so well capitalized, they were able to benefit from the credit crisis," says Warwick, noting that these institutions' capital levels remain strong. "A lot of players had to restrict their lending. The Canadian banks made a big effort to grow their loan books. That's one of the reasons why Canada did not suffer as much as other countries." Besides owning select energy stocks, such as Suncor, Warwick likes a number of income trusts because they are adapting to 2011 tax legislation and intend to keep their distributions unchanged. "In many cases, they are converting from income distribution to dividends, which creates a great opportunity in some of those income trust names," says Warwick.

Source: Think Dividends

Tunnel Vision

This week I seem to be getting most of my ideas for posts from my readers. Today I want to talk about bank loyalty and why it isn’t always a good thing. Many people believe they will be rewarded for sticking with their current bank, for being a loyal customer. I’m going to burst that bubble.

Story time.

A long time ago in the far of land of Toronto, I got married in July 2008. After we got married we needed to combine accounts. I was banking at RBC and my wife was banking at TD Canada Trust. Which bank to pick? First we went to RBC. I was loyal to this bank for a long time simply because when I was looking to get my student loan taken care of they were the only bank doing it. This was a year before the government took over the student loan business because 4 out of 5 of the big banks weren’t offering to process the loans the government had approved of. So there I was with my student loan and I was finally going to college. I became very loyal to RBC because of this. Fast forward eight years since I started doing business with them, and they began to run a promotion, get a free netbook when you open an account and do a bunch of other things. Looking into this offer, I had been doing everything they requested for years. In looking into moving my wife’s account over I asked about getting the netbook. Turns out they wanted existing customers to jump through bigger hoops then new customers. Thinking this was unfair we removed RBC from the list of possible candidates.

Next up was my wife’s bank TD. TD offered something I think all banks should offer, longer hours. However that said they offered nothing else other than that convenience. The lines were usually always long at that bank due to the longer hours. I hate lines. We decided that maybe a bank that neither of us were loyal too might be an option. After looking at the other banks there we settled on BMO, simply for the Air miles that my wife loves.

Now when I go to look for a mortgage or a self-directed investment account, I’ll gladly consider BMO first and last, but that is where the loyalty ends. For a mortgage, I’ll first go to BMO and get the best rate they can give me, then I’ll walk across the street and stop in at CIBC and see if they can beat it and win my business. Following that and with 2 offers in hand, I’ll walk down the street and stop in at RBC, again to try and get their best rate and see if they will try to win my business. With 3 offers now in a file folder, I’ll cross another street and stop at a Scotiabank and offer them the chance to do the same thing. Hopefully by this time I’ll be a masterful negotiator. The next stop with four offers, is TD Canada Trust, just down the street from Scotiabank, all of this is easy walking distance from the BMO where I started. My final stop on my way back to my car will be BMO. I’ll again give then an opportunity to beat all the rates and offers I’ve been given. Then I’ll take all five offers home and think about it. I’m not sure if this town has credit unions but if it does I’ll also check those out as well.

Then I’ll pick the best offer and move all of our banking to that bank if it’s not BMO. It might be that BMO wants to continue to have my business and wins the contract to sell me a mortgage, but it might not be. The thing I’m trying to get across is don’t have tunnel vision. Don’t stick to one bank because they did you a huge favour like RBC did when I was looking for a student loan. Don’t stick with a bank just because you like the tellers they have. While you might be able to get the best rate possible at the bank you are currently at, don’t think that the bank is going to be loyal to you. They might be, but they most likely are just too big to really care about the individual customer. Look around consider all your options and be prepared at other banks to say “I’d like to get your best rate possible and if you win my mortgage business, I’m prepared to move my other business here too”

Loyalty is great, but it’s a commodity, learn to sell it to the best priced bidder. Make the banks work for it.

I’d also like to add not to keep all your eggs in one basket. Having a couple different banking options gives more security. I’m not really certain on why this is, but I feel more comfortable with this.

Also, I wouldn’t mind touching on something regarding emergency funds. I think that everyone should keep $500 of their emergency fund IN CASH in their home. If for any reason the power went out (remember the black out anyone?) or you were unable to leave the house (remember the ice storm?) you will have $500 in cash ready and available without having to use your credit card or go to an ATM (which may not work if the power is out everywhere). This can cover emergency home services like a plumber if you have flooding or renting a generator for whatever reason. Just something that might be useful to keep in mind…

Great post.

Good point and well taken on this bank loyalty thing. I had student loans with CIBC – when I was looking there were two people in two handling them RBS and CIBC – CIBC’s line was shorter so I went there. I have investments and accounts with TD, investments and accounts with ING and have lately been looking at Credit Unions to move my money to. My bf is with a credit union that I can be grandfathered into but don’t qualify to be part of on my own (I’m not mennonite) that have some really great options and the people there are very genuinely acting in your best interest.

Case in point – they are the ones that suggested we read A Wealthy Barber before we started anything, that we pay off our debts before saving for a house, and that they won’t be going anywhere, so if it takes three years to get out of debt so be it. because he has shares in the Credit union as part of his account package they act with our best interest to keep customers loyal. They also agreed wholy with the plan I set out with him and send periodic messages to see how things are going!

Canada Trust couldn’t figure out why I wasn’t jumping on the chance at $22,000 Line of Credit with which to purchase my house, and why I would say no to their “Fantastic” TD Visa card ( I had one, I cancelled it because it was too tempting to derail my plan) and apparently I have three heads and don’t know what I’m talking about when it comes to the types of mortgages out there – one person still thought you could get the 0%, 40 years even after the memo came out saying this was no longer an option as moved by the government and Bank of Canada.

Bank loyalty may not be the issue. It may be branch persons who are being paid to snow us horribly with their lack of knowledge, or on t he flip side, the over and above measures some will go because they genuinely care for their clients.

Bottom line – be an informed consumer and do your research – as Jason shows in his post.

Also, your banking does not need to be where your mortgage is. Actually, I don’t think I would have them together just for the sake of “not all your eggs in one basket”. Besides I’m too lazy to change everything (payroll deposit, auto withdrawls, etc). They can only pull my weekly mortgage payment and nothing more because I don’t bank with them.

It is sad; but there is no loyalty for anything any more – including banking. We were with our mortgage company for almost 10 years and they wouldn’t waive the IRD penalty vs charging us the 3 month interest penalty (we knew we had to pay the penalty and were willing to) – a difference of 3K to maintain our 300K+ mortgage. Fine. Greedy buggars – we’ll pay your penatly and move on. In 5 years will we still stay with TD? Who knows. Depends on who is willing to give us the best rate at the time. I hope TD does, so far I like dealing with them.

Source: Canadian Savings