The wide range of services that trust companies offer to their customers are not used as much as they should be. Many widows wish that their husbands had used a trust company's services before death. Had this been done, it is likely that a proper will would have been prepared, insurance and investment plans made, and the impact of estate and succession duties minimized by experts. The trust company is in a position to supply skilled, objective advice on all legal and financial matters. In addition, it can provide most of the services you might request of a close friend.
Most trust companies have savings accounts either with or without chequing facilities. They issue guaranteed investment certificates and operate investment funds. Safety deposit boxes
are available, and the trust company is usually willing to advise you on, or manage, your personal investment portfolio. The companies handle real estate transfers, sales, appraisals and management. They will look after the details of mortgage or home administration, including collecting rents and paying bills. The will act as financial guardians of minors and incompetents and will act as skilled executor for a will.
Most trust companies have savings accounts and what are known as guaranteed deposit accounts. Both of these are generally suitable for short term saving.
The savings account operates in much the same way as a commercial bank savings account. Chequing facilities are available if needed and interest is paid semi-annually. One of the advantages of this type of account is that the rate of interest paid is usually higher than that paid by banks. Like the banks, however, the trust companies reserve the right to vary the rate of interest as they wish. Deposits in a savings account establish you as a customer of a trust company and may make it easier for you to utilize the extensive services of the trust company described earlier. The chequing privileges are very convenient, the charge usually amounts to about ten cents per cheque after one free cheque per month for every $100 balance. The trust companies are open for longer hours than the banks. Your deposits are of course highly liquid in that you can withdraw them whenever you wish. The large trust companies are as safe as the chartered banks in Canada and, like the banks, are subject to federal inspection and audit. Some have total assets of more than a billion dollars. The trust company savings account is most useful for those who wish to open a savings account with some chequing facilities and for those who would like to establish themselves as customers of a trust company, in order to become familiar with, and more conveniently avail themselves of, the varied services the trust company offers.
The guaranteed deposit account has all the advantages of the trust company savings account except that it has no chequing privileges. You must either go to the trust company personally to withdraw your money, or you may have it sent to you through the mail. The account usually has a higher interest rate than the trust company savings account and the rate is, moreover, normally calculated on a minimum monthly balance rather than on a quarterly balance.
The high rate of interest and the lack of chequing facilities make this type of account ideal for short term accumulation of savings. The account can be used to save money for purchasing costly items or to accumulate money in amounts large enough to be placed eventually in long term savings facilities. If you have any bonds, the interest payments you receive from them could be placed in a guaranteed deposit account, where they would earn about 32 to 42 per cent interest and thus accumulate toward the purchase of another bond. As the bond interest payments are themselves earning only 3 to 42 per cent, instead of the higher bond rate, full compounding at the bond dividend rate is not obtained. However, the effective compounding rate of interest is obviously higher than if the dividends had been saved in a commercial bank savings account paying only 2% per cent.
