What is a Cash account?

A Cash account is an investment account that can be a great addition to your portfolio if you've maxed out your registered accounts' contribution room. A Cash account is a non-registered account (not registered with the government), which means there are no limits to how much you can deposit and withdraw. However the money you make in the account will be taxable. 

Unlike Margin accounts which are also non-registered, Cash accounts do not have the option to borrow money. Therefore, you can invest only with the cash available in your account. This straightforward approach makes a Cash account favorable for people looking to invest securely within their means.  

• Quick and easy account setup: It takes only a few minutes to open a Cash account.  
• Simplicity: It’s straightforward to manage a Cash account, making them ideal for investors looking for another investment account. You only invest the money that you have deposited into the account. Plus, Cash accounts do not have contribution or withdrawal limits.
• Automatic currency conversion: Like registered accounts, your funds will be converted automatically whenever you buy foreign investments, like U.S. stocks. 
• Please note: All Questrade accounts are dual currency. This means you can hold U.S. dollars in your account and do not have to exchange currency for every transaction, provided that you have sufficient cash in that currency for the transaction and, for registered accounts, have not selected to settle all transactions in CAD.
• No account interest charges: Since you can’t borrow money from a Cash account, there are no interest charges, making your investment costs more predictable.
• Avoid leverage-related risks: Because you can’t borrow money in a Cash account, you avoid the risk of increase losses due to leveraging (borrowing more money to buy more investments) or margin calls.

A Cash account operates in a straightforward manner: you can only invest the money that you have deposited into the account. Here's how it works:

1. Depositing Funds: You start by depositing money into your Cash account. There are many ways to do this  including instant deposit, online banking, pre-authorized deposits, and account transfers from another institution.
2. Buying Securities: Once your funds are deposited and cleared, you can buy securities such as stocks, ETFs, options and other investment products Your only limit is the amount of cash available in your account.
   • Please note: You can only be approved up to Level 2 options trading in a Cash account.
3. Selling Securities: When you sell securities, the proceeds are added back to your cash balance. Please note, these funds are subject to the settlement period before you can withdraw them. The settlement period is a duration of when you trade a security and when that transaction is completed (which is 1-2 days after trading). 
4. Withdrawals: You can withdraw available cash from your account, subject to the settlement period of any recent trades. 

This process ensures that your investments are fully funded and eliminates the risks associated with borrowing, making it a preferred option for many investors.

If you’re thinking about the difference between a Cash and Margin account, please take a look at this helpful article.

You can diversify your portfolio with a wide range of investments in a Cash account. This includes:

• Stocks (both Canadian and international)
• ETFs (Exchange Traded Funds)
• Mutual funds
• Options
• GICs
• Bonds
• Gold and silver bars
• Cash

Are you ready to start your investment journey, or looking to add an easy-to-manage account to your portfolio? Consider opening a Cash account today and take hold of your financial future with confidence and clarity.

Note: The information in this blog is for information purposes only and should not be used or construed as financial, investment, or tax advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied is made by Questrade, Inc., its affiliates or any other person to its accuracy.