FAQs For Existing BMO Investorline Clients
What is Foreign Exchange?
The buying and selling of currencies. Exchanging a dollar amount of one currency for the equivalent dollar value of another currency.
What currencies can I exchange on the site?
Canadian and US currencies can be traded at this time.
In which accounts can I place foreign exchange conversions?
Foreign exchange conversions can be conducted in all accounts except RESP (Registered Education Savings Plan) accounts.
What time of day can I place a foreign exchange conversion?
Foreign Exchange conversions can be placed between the hours of 8:30 a.m. to 4:15 p.m. (ET) Monday to Friday.
How is the foreign exchange rate calculated?
The foreign exchange rate is based on the current trading value of the Canadian and US dollars.
Is there a fee for carrying out a foreign exchange conversion?
For the purpose of Foreign Exchange transactions the fees are built into the transaction.
What can I hold in my RRSP?
BMO InvestorLine permits the following variety of investments in your RRSP:
- Term Deposits and Guaranteed Investment Certificates receiving interest annually, such as those issued through Bank of Montreal
- Stocks and Bonds of corporations listed on a Canadian stock exchange
- Bonds and Debentures issued or guaranteed by the Government of Canada
- Bonds and Debentures issued by a province, municipality or Crown corporation
- Strip Coupon Bonds
- Equity-linked notes
- Rights and Warrants that can be used to purchase qualified investments
- Shares listed on a prescribed stock exchange outside Canada
- Units of a Mutual Fund trust, such as those offered by BMO Mutual Funds
- Covered calls, long calls and puts, LEAPs calls
- Mortgage-backed securities
- Gold and Silver certificates
BMO InvestorLine does not allow the following investments in your RRSP:
- Employee options to purchase stock
- Gold, Silver and other precious metals
- Commodity Futures or Contracts
- Listed personal property such as works of art and antiques
- Gems and other precious stones
- Bonds where the issuer is a wholly-owned subsidiary and the shares of its parent are not listed on a Canadian stock exchange
- Mortgages on commercial properties which you or a family member own
- Small business investments
- Uncovered Puts and Call Options
- Bonds or Debentures of a company whose shares are listed only on a prescribed foreign stock exchange even though the company's shares may be qualified
What is a Locked-in Retirement Account (LIRA) or Locked-in RRSP?
Legislation governing employer-sponsored pension plans generally provides for "portability" of pension rights. As a result, when an employee who is a member of a registered pension plan and, who in many cases is entitled to a deferred pension benefit, terminates employment with the pension plan sponsor/employer, he or she can request the transfer of the commuted value of the deferred pension benefit to a locked-in RRSP, also known as a LIRA. The term differs depending on the province in which the pension plan is administered, but the plans differ only in details.
A LIRA or locked-in RRSP is similar to an ordinary RRSP, except that it is governed by a "locking-in" agreement which ensures that the transferred pension funds and the subsequent earnings are used to provide periodic retirement income. In other words, it cannot be cashed-in or withdrawn in a lump sum before the specified retirement age. Some investors will have multiple LIRAs or locked-in RRSPs because they have worked at different corporations.
What is an RRIF?
An RRIF is one of the most flexible investment vehicles for retirement. Most RRIFs are established on the transfer of RRSP assets when you reach 71. An RRIF is a vehicle for tax deferral similar to an RRSP, but RRIFs are subject to the same rules regarding qualified investments. You may not make new tax-deductible contributions to an RRIF. You must withdraw a minimum amount each year commencing the year after you establish the RRIF.
There is nothing to stop you from taking more than the minimum. However, if you do, any excess will be subject to withholding tax at source. The withholding tax will be taken into account when calculating your tax payable when filing your annual return.
One more thing about RRIFs and annuities. Don't wait until you are 71 to start planning what you are going to do with your RRSP – you will need some time to investigate your options. In fact, for those retiring early, you can start an RRIF much earlier than age 71. Some people use a portion of their RRSP assets to fund retirement before they are eligible to receive either CPP (Canadian Pension Plan) or OAS (Old Age Security).
Another thing you should know. Prior to the first payment being received from an RRIF, you may choose to use your spouse's age rather than your own to determine the minimum payout amount. Once made, that choice is permanent.
What is a Life Income Fund (LIF)?
A LIF is a form of a RRIF to which you may transfer your locked-in retirement funds (the funds from a registered pension plan or a locked-in RRSP). A LIF is subject to essentially the same locking-in, survivor benefit and transfer option requirements imposed under pension benefit legislation as a LIRA or locked-in RRSP. It provides the pension plan member with the flexibility to defer the purchase of a life annuity until the end of the year in which he or she turns 80 (rather than 71 as is the case for holders of ordinary RRSPs.)
What is a Restricted Life Income Fund? (RLIF)
RLIFs were created to accept the transfer of locked in assets from a Life Income Fund (LIF), locked-in RSP contract entered into after May 8, 2008, or, under some circumstances, pension benefit credits. In the year that they turn 55, or in any subsequent year, individuals will be allowed to "unlock" up to 50% of the value of the RLIF by transferring it into a non-locked-in RSP or RRIF as long as this transfer happens within 60 days of the creation of the RLIF.
What is a Restricted Locked-in Savings Plan (RLSP)?
RLSPs are able to accept transfers from RLIF (Restricted Life Income Fund) plans for individuals who wish to return RLIF assets into a locked-in plan. Someone may want to make such a transfer because they do not want a steady stream of retirement income at the time.
What is an annuity?
An annuity is an investment vehicle usually offered by insurance companies and is designed to provide regular periodic payments to the policyholder for a specified period of time.
Annuity rates fluctuate with interest rates and generally, it is best to purchase an annuity when rates are historically high. If you purchase an annuity when interest rates are low, you may find that your income may not be sufficient for retirement.
Annuities are not flexible investments and once purchased, cannot be reversed.
What is a spousal RRSP?
Rather than contribute to your own RRSP, you may contribute to your spouse's RRSP. The allowable contribution is determined based on your income, not your spouse's and is deductible in the calculation of your income. The contribution will use up some or all of your contribution room thus reducing for tax purposes, the amount you may contribute to your own RRSP. The principle advantage of this approach lies in future income splitting. If you believe that your spouse's marginal tax rate after tax credits during retirement will be lower than yours, then as a family unit, the total tax burden on retirement income can be reduced by having each spouse receive income in retirement from their own RRSPs.
What would happen if my spouse were to withdraw from a spousal plan to which I contribute?
Normally, a withdrawal by your spouse from his or her RRSP must be taken into the spouse's taxable income and is taxed at the spouse's marginal tax rate. However, there are a special set of rules known as "attribution" rules which provide that certain withdrawals from a spousal RRSP will be "attributed" back to the contributor of the funds. Essentially, any withdrawal from a spousal RRSP which has not yet matured will be attributed back to you if you have contributed to the spousal plan in the year of the withdrawal or the two preceding years.
In general terms, the attribution rules will not apply if at the time of the withdrawal:
- you and your spouse are living apart as a result of a marriage breakdown
- either you or your spouse are not a resident of Canada for tax purposes (There may be non-resident withholding tax issues to be addressed.)
- your spouse transfers, in general terms, the RRSP assets to an RRIF (and does not withdraw more than the prescribed minimum amount), or, transfers the RRSP assets to an annuity (which is not commuted for three years).
Is there a minimum age limit for an individual to participate in an RRSP?
No. As long as qualified income was earned in the previous year and a Social Insurance Number is available to register the plan, there is no minimum age restriction.
However, a self-directed RRSP at BMO InvestorLine requires the individual to be at least 18 years of age because of the contractual nature of securities transactions. Individuals who are under the age of majority can open an RRSP with BMO Bank of Montreal to invest in GICs instead.
How does the $2,000 RRSP overcontribution limit work?
Currently, individuals who were at least 18 years of age in the preceding year are allowed to over-contribute to their RRSPs by up to $2,000 without incurring the monthly 1% penalty tax. You cannot claim a tax deduction for the overcontribution in the taxation year it is made but you can wait until new RRSP contribution room is available in a future year and deduct the overcontribution in that year.
NOTE: For planholders with overcontributions in excess of $2,000 as at February 26, 1995, transition rules allow the excess to be kept and deducted against future RRSP contribution room (to a maximum of $6,000) rather than forcing immediate withdrawal of the excess.
What are the next steps?
Can I enroll a particular security?
You can choose any number of eligible securities from your holdings to enroll in the plan.
How do you credit my account?
The monetary value of your dividend will be converted to shares and credited to your account. In the event that the monetary value results in fractional shares, we will credit your account with the maximum number of shares and the balance will be credited as cash to your account.
Is there a cost to enroll in the Dividend Reinvestment Plan?
There is no cost to enroll in the plan.
What are ETFs?
Combining characteristics of traditional mutual funds and stocks, ETFs are baskets of stocks that give you part ownership in an underlying portfolio of securities that tracks a specific market index, such as the S&P/TSX 60, Dow Jones Industrials or the S&P 500. Unlike mutual funds, you do not purchase or redeem shares from the fund. Instead, like stocks, you buy and sell shares of ETFs on an exchange.
What Are Corporate Actions?
A corporate action is an event initiated by an issuer that affects the securities (equity or debt) issued by the company. These include mergers and acquisitions, spin-offs, cash stock mergers, forward and reverse stock splits and name changes. Some corporate actions, such as a dividend (for equity securities) or coupon payment (for debt securities or bonds) may have a direct financial impact on shareholders or bondholders. Some, such as stock splits, may have an indirect impact on shareholders, as the increased share liquidity may cause the stock price to rise. Others, such as a name change, have no direct financial impact.
Why do companies issue Corporate Actions?
- To return profits to shareholders. A public company may declare a cash dividend to be paid on each outstanding share.
- To influence the share price. If the price of a stock is too high or too low, the stock's liquidity suffers. Overpriced stocks will not be affordable to all investors, and underpriced stocks may be delisted. Corporate actions such as stock splits or reverse stock splits increase or decrease the number of outstanding shares resulting in a higher or lower stock price.
- For corporate restructuring. A merger is a corporate action in which two competitive or complementary companies join to increase profitability.
How does BMO InvestorLine inform you of Corporate Actions?
Important Message for Clients:
- While BMO InvestorLine is not required to communicate corporate actions, once the information becomes available we'll make every effort to inform clients of any notifications through MyLink - your secure personal inbox, by phone or by mail.
In addition, BMO InvestorLine is not responsible for any missed, lost or late communications sent through these channels. It is your responsibility to monitor the status of the securities you hold.
Remember to sign in to your account on a regular basis to check MyLink for messages.
We advise you to review all corporate actions you receive, to ensure you are fully aware of any impact on the securities you hold. Please note that some corporate actions may require you to select one of several alternatives and may also be time sensitive. Therefore, your attention to corporate actions that may affect your securities is imperative.
- BMO InvestorLine will not pay out or deposit funds, or adjust your security position until we've received the securities from the transfer agent representing the issuer, regardless of the dates disclosed in the corporate action.
- BMO InvestorLine will not permit you to sell the securities subject to the corporate action until we've received and deposited the shares to your account.
- Any proceeds resulting from a corporate action will be paid in the currency in which the security is held with BMO InvestorLine.
What is Fixed Income Online?
As a BMO InvestorLine client you can buy and sell Canadian or US dollar-based fixed income products online. Start by searching through one of the largest online bond inventories for the fixed income product that meets your investment criteria. Choose amongst various types of fixed income products including federal, provincial and corporate bonds, strip coupons and residual bonds, T- Bills, commercial paper and bankers' acceptances.
What am I paying in commissions when I buy and sell fixed income products?
In fixed income trading, the industry standard is to build commissions into the price. With Fixed Income Online, you can browse through our inventory at your leisure and check out our competitive offerings.
Why do the prices and yields change when I change my order quantity?
Our prices and yields vary depending on the amount being purchased. In general, the larger the purchase amount, the better the quoted price and yield.
What is accrued interest?
Accrued interest is the interest that has accumulated on a bond since the last interest payment date. In calculating the total cost of a bond purchase, the purchaser must pay the accrued interest until settlement date. The purchaser then receives the full interest on the bond at the next interest payment date. Conversely, when one is selling a bond, the seller will receive the accrued interest as part of the total value of the trade.
What about exchange traded debentures?
At present, exchange traded debentures are only available through a BMO InvestorLine representative. The commission is a minimum of $35 plus $1 per bond (1 bond is $1000 face/par value). For example, 50 bonds or $50,000 face value of a bond would result in the following commission: $35 plus $50 = $85.
How do I set up my BMO InvestorLine account to accept deposits from my bank account?
In your bank account, you can add BMO InvestorLine to your list of personalized "billers". Go to the Bill Payment area of your online banking site and follow the steps necessary to add a new biller.
BMO Bank of Montreal Online Banking
You will see three "biller" options for BMO InvestorLine, choose the one(s) that are applicable to you.
You will be asked for your 8 digit account number.
After a bill has been added, your personalized list is accessible through online banking, telephone banking, or the ABM. For more information about online bill payment please visit your bank's website. For BMO Bank of Montreal online banking customers sign into your account and refer to the Bill Payment FAQs, accessible from the "help" link located at the top right of the screen.
What types of deposits can I make to BMO InvestorLine through my bank's bill payment service?
There are three types of deposits you can make:
- BMO InvestorLine - deposits and regular contributions (Cash, Margin and RRSP) allow you to make contributions to your RRSP account and deposit funds into your investment account.
- BMO InvestorLine - spousal contributions (RRSP Accounts) allow you to make spousal contributions to your Spousal RRSP account.
- BMO InvestorLine - administration fees (RRSP and LIRA) allow you to pay the administration fees for your RRSP or LIRA accounts.
Can my BMO InvestorLine account accept deposits through the bill payment service from financial institutions other than BMO Bank of Montreal?
Yes, you can set up BMO InvestorLine as a "biller" or "payee" and send funds from your bank account at most major Canadian financial institutions. Please contact your bank to see if they include BMO InvestorLine as a "biller" or "payee".
How long does it take for a deposit made through the bill payment service to go through?
Deposits can take 2 to 5 business days to be processed to your BMO InvestorLine account, depending on the processing time required by your financial institution.
Is there a limit to the amount of money I can send to BMO InvestorLine from my bank account using this service?
Your bank may have a maximum daily limit for electronic or telephone transactions, please check with your bank for more details.
What happens if there are unauthorized transactions in my account(s)?
To ensure superior quality client service, we will guarantee a 100% reimbursement* for any unauthorized transactions conducted in your account that results in a direct loss. Read our Online Security Guarantee for more information.
How can I access the cash in my BMO InvestorLine investment (non-registered) account?
If you have opened a Cash or Margin account with us, we have automatically included AccountLink® Service as part of your account features. AccountLink Service consolidates your financial requirements into one easy-to-manage package. AccountLink is a service that we include for all non-registered accounts. It wraps the convenience of a BMO Bank of Montreal chequing account in with your BMO InvestorLine securities account.
You access your cash the same way you would with a regular BMO Bank of Montreal chequing account. You can:
- write cheques
- deposit or withdraw from any BMO Bank of Montreal Instabank® Automated Banking Machine (ABM) across Canada
- withdraw funds from any ABM on the INTERAC®* network in Canada or through an ABM on the Cirrus®* network in the U.S. and around the world
- make point-of-sale purchases using the INTERAC Direct Payment Service (debit card transactions).
As a BMO Bank of Montreal customer, your AccountLink Services can be included as part of your Everyday Banking Plan Fee. Just another way we are working towards meeting your comprehensive financial needs.
I'm already a BMO Bank of Montreal customer, do I need a special bank card to use AccountLink Service?
AccountLink Service can be linked to your BMO Bank of Montreal FirstBank® Card, just like your other BMO Bank of Montreal accounts. By linking your AccountLink Service to your FirstBank Card, you can enjoy the many services offered through BMO Bank of Montreal including:
- self-serve banking via Online Service or Telephone Banking Service
- access to BMO Bank of Montreal Instabank Automated Banking Machines (ABM) across Canada
- access to ABMs on both the INTERAC network in Canada and the Cirrus network in the U.S. and around the world
- point-of-sale purchases using the INTERAC Direct Payment Service (debit card transactions).
If you don't have a FirstBank Card, you can either contact your BMO Bank of Montreal branch to have one issued, or we can issue you an AccountLink Service Card. The choice is yours.
How do I transfer funds from my BMO InvestorLine investment (non-registered) account to my BMO Bank of Montreal bank account?
If you already use BMO Bank of Montreal's Online Service, or Telephone Banking Service and you have added your AccountLink account number to your FirstBank Card, then you can use Online Banking, Telephone Banking or BMO Bank of Montreal Instabank Automated Banking Machines (ABM) to transfer funds.
As well, you can call a BMO InvestorLine representative or visit your nearest BMO Bank of Montreal branch.
Can I access my U.S. funds in my U.S. AccountLink account from an ABM?
No. To withdraw funds in U.S. dollars from your U.S. Dollar AccountLink account, please drop by the BMO Bank of Montreal branch nearest you.
What is the interest paid on my cash balances?
BMO InvestorLine offers competitive rates and fees. Please visit our Fees page for more details.
Is there a cost to using the AccountLink service?
Each month you are entitled to two free cheques, withdrawals or transfers at a BMO Bank of Montreal branch or Instabank Automated Banking Machines (ABM), or INTERAC Direct Payment Service transactions. Thereafter, regular BMO Bank of Montreal banking fees apply. For more information, please contact us.
What is a margin account?
A line of credit is available for clients who wish to buy securities without paying for them in full. The term "margin" refers to the portion of funds you must provide, which, together with the line of credit loan, is used to make the purchase.
To buy on margin is to borrow money from BMO InvestorLine to purchase securities. The loan is secured by the value of the assets in your portfolio. All accounts are monitored daily to ensure sufficient margin levels are maintained at all times. If the price of a margined security falls to the point where the account becomes under-margined, you will be responsible for immediately taking one of the following actions:
- deposit funds or marginable securities into your BMO InvestorLine account to cover the amount you are under-margined; or
- liquidate securities to cover the amount you are under-margined.
In the event that you do not act when your account becomes under-margined, BMO InvestorLine may sell any or all of your positions. We will then apply the net proceeds to your loan with our firm, thereby eliminating or reducing any margin owing on your account.
Margin accounts are only available as non-registered accounts. You may apply for margin account privileges by completing a new account application. Margin accounts must be approved by BMO InvestorLine and a credit check must be conducted.
What is the interest charged on my debit balances in my margin account?
How is interest calculated and when is it paid or charged to my BMO InvestorLine account?
Interest is calculated on the average monthly credit and/or debit balance in your BMO InvestorLine account during the period from the 22nd day of the previous month through to and including the 21st day of the current month, and is posted to your account and compounded monthly.
How do I place my first trade?
Payment is required to be made in advance of first trades. For margin accounts, please ensure that the amount required to meet BMO InvestorLine's prescribed margin requirement is in your account before making your first trade.
Here's how you can deposit funds into your BMO InvestorLine account:
For Cash/Margin Investment Accounts:
You can use the AccountLink® service to deposit funds. AccountLink Service consists of your regular securities account at BMO InvestorLine and a BMO Bank of Montreal Canadian Dollar Chequing account and, if requested a US Dollar Chequing Account. AccountLink is a service that we include for all investment (non-registered) accounts at BMO InvestorLine. It is designed to give you quick and easy access to the cash in your investment account and to provide you with a convenient way to settle your trades.
You can contact us by phone and arrange for funds to be transferred from your BMO Bank of Montreal bank account or transfer funds between accounts online through BMO Bank of Montreal Online Banking.
You can also mail us a cheque. Make sure your BMO InvestorLine account number is on the cheque. Please note that your cheque must clear before you can place a trade.
For RRSP Accounts:
You can contact us by phone and arrange for funds to be transferred from your BMO Bank of Montreal bank account or your BMO InvestorLine cash/margin investment account.
You can also mail us a cheque. Make sure your BMO InvestorLine account number is on the cheque. Please note that your cheque must clear before you can place a trade.
Once your funds are in your BMO InvestorLine account, you can place a trade:
Can I retrieve quotes or place orders on US Over-The-Counter securities?
Online quotes and trading is available for Pink Sheets and US Over-The-Counter Bulletin Board (OTC-BB) securities. Please note: these securities cannot be traded in registered accounts. Due to the speculative nature of these markets, please be aware that a very high degree of risk is involved when investing. For more information, please visit www.otcbb.com.