Gyroscopic Investing

Hi,
I'm a Canadian, researching the PP model.
I know that the prevailing advice is to hold your cash in a money market fund containing all Canadian t-bills.
But I see that these funds have high MERs (.5% - 1% range).

As an alternative, could put my cash in the Royal Bank eSavings account? The interest rate for it is 1.2% (higher than the yeild on the T-bill funds, I think). There is no annual fee. I think it is $5/transaction. It seems like a good deal, but maybe there's some hitch that I'm not aware of.

Here is a link to a write-up on the account:
http://www.rbcroyalbank.com/products/de ... vings.html

Hi Christina, do you have the option to purchase and hold Canadian t-bills directly, without paying any fees?  In the United States you can purchase t-bills via a brokerage like Fidelity or TreasuryDirect.gov for free.  If you have an option like that in Canada, it could be something to consider.

The trouble with a standard bank account is that if they're anything like US accounts, they are insured by an FDIC-like system.  The FDIC doesn't have even a small fraction of the money needed to cover widespread bank failures, so the additional interest does come with some (although perhaps not very large) risk.

Having said that, I do have modest percentage of my cash slice in FDIC-insured accounts (for convenience and because I have some CDs waiting to mature.)  The bulk of my cash is in Treasury Bills and Notes that I hold directly in a brokerage account.

ah ok, I see. Yes, the account is insured by the government of canada (CDIC).
Yes, I assume that I can buy Canadian treasury bills directly. I'll look into it, thanks.
CHristina