Your Guide to HISAs

Looking for a secure, short-term place to hold some cash? One option is a high interest savings account (HISA). Many brokerages offer investment accounts that can invest in HISAs, which give you the ability to maintain access to your funds and earn higher interest than you would usually get with a standard bank account. 

There are a number of different types of HISAs, including HISA exchange traded funds (ETFs). HISA ETFs are available through some online or full-service brokerages, and enable you to invest in a pool of high-interest savings accounts that trade on a stock exchange. Individual HISAs are also available through brokerage firms and are purchased in a similar way to how you would purchase a mutual fund.

It’s important to note that you might have to pay a transaction fee when buying and/or selling HISA ETFs and some come with management fees.

The exact amount of interest paid within a HISA varies. This is because the interest rate paid within HISAs fluctuates in response to the Bank of Canada’s policy interest rate,¹ which, in turn, is adjusted according to wider economic conditions.

A HISA can typically be converted into cash at short notice, usually within one business day.² This can make it useful for:

• Putting spare cash to work while deciding on how to invest it.
• Saving for a short-term goal, such as a vacation or home renovation.
• Maintaining an emergency fund to cover potential unforeseen expenses.

As a lower-risk, interest-generating investment, the value of a HISA is not prone to the same market fluctuations as an equity investment. This can help provide balance within your investment portfolio, especially during times of financial market volatility. While equities have historically provided higher long-term returns, putting your money in a HISA can be a useful short-term way to keep that money growing. HISAs can also be a great place to hold cash you might need access to for any number of circumstances.

Visit the Scotia iTRADE Learning Centre.