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I'm at the point where it makes sense to transfer my RRSP, which is currently all in TD's eFunds, to ETFs. I'm setting up an account with QTrade, but I got stuck at the "Account Type Selection." When I choose RSP, it asks me if I also wish to open an individual cash account. I have no idea whether I do or not, or what the benefits of such an account are, and the QTrade site doesn't really shed any light on the subject.

Do I need a cash account if I'm just going to be transferring money from my regular bank account a couple of times a year to buy ETFs?
 

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Here is a link regarding what kind of accounts you can open with Qtrade. The first one is a "Cash Account"
http://www.qtrade.ca/investor/en/aboutus/services/accountchoices.jsp

A "Cash Account" is an account where you can only invest with money you ALREADY have and is TAXABLE.

The other option is having a "Margin Account" which allows you to borrow money at a cost (think interest rate charged on the borrowed sum and DEBT (Which ususally isnt good)). This type of account is TAXABLE as well.

Usually RRSP's are listed as different, I would send them an email. I am currently in the process of opening up an account with them also and anytime I emailed them I usually got a reply the next day (I only emailed them after operating hours). Although they are located in British Columbia so the hours may be different.

Hopefully this clears some stuff up!

EDIT: I forgot to mention that when opening a new account online there will be a few options for account type

The categories are "Non-Registered" and "Registered". An RRSP would be listed under the "Registered" account type.
Also when opening up a "Registered" account you can opt in for them to open up a "Cash Account" as well so you
have a choice if you happen to max out your RRSP contrib or for other reasons.
 

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I'm at the point where it makes sense to transfer my RRSP, which is currently all in TD's eFunds, to ETFs. I'm setting up an account with QTrade, but I got stuck at the "Account Type Selection." When I choose RSP, it asks me if I also wish to open an individual cash account. I have no idea whether I do or not, or what the benefits of such an account are, and the QTrade site doesn't really shed any light on the subject.

Do I need a cash account if I'm just going to be transferring money from my regular bank account a couple of times a year to buy ETFs?
You shouldn't need a cash account, unless you want to keep money outside your rrsp.

I would avoid opening up extra accounts, unless you need them. I would assume they are just doing some upselling.
 

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This is interesting because I always thought of a cash account as being a little different than what is explained above. For instance, if I have $5400 sheltered in my RRSP and that money is invested in various funds, then one day I decide to cash in those funds, but not the RRSP itself, I understood that the resulting money when they sell the funds would go into the cash account, still remaining protected from tax in the shelter of the RRSP. At that point I could then transfer that cash to another institution, assuming I wished to invest it somewhere else. The cash would go in the RRSP cash account in the new place, until such time as I pick my investments.

Is my understanding incorrect?
 

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This is interesting because I always thought of a cash account as being a little different than what is explained above. For instance, if I have $5400 sheltered in my RRSP and that money is invested in various funds, then one day I decide to cash in those funds, but not the RRSP itself, I understood that the resulting money when they sell the funds would go into the cash account, still remaining protected from tax in the shelter of the RRSP. At that point I could then transfer that cash to another institution, assuming I wished to invest it somewhere else. The cash would go in the RRSP cash account in the new place, until such time as I pick my investments.

Is my understanding incorrect?[/QUOTE]

Yes, very much so. I don't have time to explain at the moment, but will do so later or perhaps someone else can.
 

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That makes much more sense than my explaination Royal :D. I always though cash accounts were just for putting non sheltereed investments in. I guess it does make sense that a cash account would be used for withdrawing from an RRSP or something I guess. :D.
 

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Brilliant, thank you very much for this clear explanation. That's exactly what I was looking for. I read all the FAQs on the QTrade site before posting my question here, because I still couldn't figure out the basic reason why someone might want a cash account.

This is interesting because I always thought of a cash account as being a little different than what is explained above. For instance, if I have $5400 sheltered in my RRSP and that money is invested in various funds, then one day I decide to cash in those funds, but not the RRSP itself, I understood that the resulting money when they sell the funds would go into the cash account, still remaining protected from tax in the shelter of the RRSP. At that point I could then transfer that cash to another institution, assuming I wished to invest it somewhere else. The cash would go in the RRSP cash account in the new place, until such time as I pick my investments.

Is my understanding incorrect?
 

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TRM, what brad is talking about here appears to be a pure unregistered trading account.
There are two types of such accounts - cash and margin.
The name explains the core difference between each type.
Trading options requires a margin account.

What you are talking about is different - brokerages keep your cash safe within the RRSP shelter and sometimes give some interest for it (very low these days and usually for cash balances above $10,000 - at least at my brokerage).
 

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I don't see where brad is talking about unregistered money though. He wants to transfer his RRSP to another broker/investment. In such cases, a cash account would be a key component, so there is somewhere to transfer the money to/from as a stepping stone after brad cashes out the old investments in RRSP account A and selects the new ones in RRSP account B.

brad, you want to keep all of this under RRSP, correct?
 

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I don't see where brad is talking about unregistered money though. He wants to transfer his RRSP to another broker/investment. In such cases, a cash account would be a key component, so there is somewhere to transfer the money to/from as a stepping stone after brad cashes out the old investments in RRSP account A and selects the new ones in RRSP account B.

brad, you want to keep all of this under RRSP, correct?
Correct. All I'm doing is opening up a QTrade RRSP account where I will be setting up a Couch Potato portfolio of ETFs, and I'll transfer my existing TD eFunds RRSP over to ETFs. Maybe. I'm sold on the benefit you get from the lower MERs of ETFs, but the TD eFunds MERs are low too (not as low as I could get with ETFs, I know) and they're simple and convenient...probably the most couch-potatoey option out there for me. So I might stick it out with the eFunds for a few more years if this transfer turns out to be a hassle.

All of this was precipitated by the fact that I'm switching banks, and can no longer fund my TD eSeries funds from the bank account that I registered with them. I thought I could simply fill out a form with a voided cheque so they could make the change, but no, I have to go to the branch. The nearest branch is almost an hour away, and it'll be weeks before I can take three hours off during business hours to take care of the paperwork.
 

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I don't see where brad is talking about unregistered money though. He wants to transfer his RRSP to another broker/investment. In such cases, a cash account would be a key component, so there is somewhere to transfer the money to/from as a stepping stone after brad cashes out the old investments in RRSP account A and selects the new ones in RRSP account B.

brad, you want to keep all of this under RRSP, correct?
I understand....but there is no need for a Cash Account.
Your interpretation of what a cash account is doesn't appear to be what brokerages call a cash account.
A cash account is an unregistered, taxable trading account - not a placeholder for cash inside an RRSP.
For what brad is doing, he needs to open a new unfunded RRSP account at QTrade.
Then fill out the RRSP transfer form at QTrade.
They will withdraw all the funds from TD.
If the transfer was requested in kind, then the stocks and funds will be moved over in kind, however, I doubt that's the case.
If the transfer is requested as cash (which I think what brad is trying to do), then the securities will be sold off by TD and the cash transfered to QTrade.
That cash will show up as cash in the QTrade RRSP account and will stay as cash until brad invests it into ETFs.
The cash will stay inside the RRSP and not in the so called cash account.
If somehow the cash ends up in the cash account, it will be flagged as an RRSP withdrawal and will be hit with taxes.

So unless brad requires an unregistered trading account at QTrade as well, there is no need to open a cash account as part of the application.
 
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