This means you can have up to $100,000 of insured funds in your account, plus another $100,000 in the joint account you share with your spouse, plus another $100,000 in the account you share with your child, etc.Īlthough savings accounts may not be as accessible as chequing accounts, your funds are never locked in and you can access them any time (although this might impact bonus rate offers). Accounts held in just your name are insured separately from joint accounts. This is because they are typically insured against loss by the CDIC (Canadian Deposit Insurance Corporation).ĬDIC insurance covers deposits at member institutions up to $100,000 per insured category. Even in the extremely unlikely event that your bank goes under, your funds are safe. The value of a savings account will never decrease-there’s no risk of losing your principal. Unlike mutual funds, ETFs, and stocks, savings accounts are risk-free. Think about it: how would you feel if your emergency fund took a 20% hit tomorrow? That kind of volatility is unattractive when you need your money in the short term or are uncomfortable with risk. However, the potential for a higher return comes with the potential for loss. ![]() ![]() It’s no secret that interest rates on savings accounts are low compared to the returns you might earn by investing in the market. Taking advantage of these offers is a great way to grow your money faster. Others offer special introductory rates for new customers. Some accounts pay a higher interest rate when you maintain a minimum balance. Your interest is earning interest! At the end of the month, you’ll get an interest deposit for $1.67. So each subsequent day, your interest is calculated based on your initial $1,000 plus that $0.05479 you earned the day before. The interest rate is 2% annually, and interest is calculated daily and paid monthly.Ģ% divided by 365 yields a daily interest rate of 0.005479%. Say you have $1,000 in a savings account. It’s easiest to illustrate with an example: What is compound interest? It’s when you earn interest on interest. This is ideal because it leads to a magical thing called compound interest. Many accounts calculate your interest daily and pay it monthly (but check your terms to be sure). ![]() Savings accounts pay a set interest rate on your deposits. They also help you make money, by paying interest. Savings accounts aren’t just for organizing your money. A bigger purchase like a furniture set or a new computer.Savings accounts are best for short-term savings goals and for money you might need to access quickly. This makes it easier to manage your finances. Money for bills and spending should go into a chequing account, and money dedicated to savings goals should go into a savings account. It makes much more sense to separate your funds. All your money would be lumped together you wouldn’t know what was for spending and what was earmarked for saving. Think about how hard it would be to save money if you only used your chequing account. ![]() The main reason to use a savings account is to, well, save! Here are a few reasons you might use a savings account: Instead, they provide a safe and accessible place to stow and grow your money in the short term. And they aren’t for long-term goals like retirement. Savings accounts aren’t for your daily transactions (that’s what chequing accounts are for). They’re available through the Big 5 banks and online-only self-serve banks. A savings account is a bank account that pays interest on your deposits.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |