The most common medium to accumulate money is a savings account. You save money for a rainy day when things take a wrong turn, whether it is a medical scare or a significant purchase. However, in case you didn’t know, there are other options to increase your savings faster compared to a conventional savings account.
Bonds
The federal government or provincial government issues government savings bonds. It rewards a fixed interest rate, which is released to the public on a set schedule. Furthermore, the reward is also subjected to variables with one per cent interest against a two per cent inflation rate. The reward may be low compared to corporate bonds and provincial certificates.
Furthermore, since the Canadian government is legally obligated to issue these saving bonds, they also come with CDIC protection. These bonds are commonly traded in the Canadian market with general interest rates as high as four per cent. Bonds can also be sold early. Unfortunately, you will suffer a capital loss, which may be carried forward on your tax return.
Mutual Funds or Stocks
Secondly, you can also turn to stocks to grow your finances. Now you can purchase the stock in an individual capacity or purchase them through a mutual fund. It is indeed a healthy option to low interest-earning bonds and savings accounts.
Purchasing stock is a viable option for above-average capital gains. However, if you decide you take the individualistic route, you will spend most of the time managing and updating investments. On the other hand, working with mutual funds mimics the same results as a major stock index such as Toronto Stock Exchange. Check financial planner Toronto for more information.
High-interest Savings Account
You can also opt for a high version of a savings account. With a high-interest rate, there is a requirement for a saving ceiling to experience the rewards. Therefore, manage the savings accordingly. In addition, these bank accounts are not for regular deposits and withdrawals. However, the high-interest savings accounts in Canada are CDIC insured, meaning the principal amount is protected.
Such forms of alternative savings will grow your investment faster compared to bonds and low-interest certificates. For more information to achieve your saving objectives, contact Merrick Financial Inc. by scheduling an appointment online.
Guaranteed Investment Certificate
The fourth option alternative to savings is a guaranteed investment certificate. However, prepare to say bye, bye to your money for a very long time because these are fixed deposits with an annual return. Regardless, the interest income is more than any savings account, depending on the form GIC chosen. They come in non-redeemable and cashable options.
However, due to unforeseen circumstances, you can withdraw the money. Unfortunately, the accumulated interest is the opportunity cost you will have to forgo. CDIC protects the investment in GICs as the amount is insured up to $100,000
Checking Account
A checking account won’t yield the same results as mutual funds or GICs but still is a decent option. From a capital investment perspective, the interest earned is the same level as a savings amount. However, these accounts are CDIC insured, and you can withdraw money anytime you, please. Furthermore, you can also avoid withdrawing fees since the ceiling is much higher. Following are a few activities accessible with a checking account:
- Cash and check deposit
- ATM and bank tellers withdrawals
- One-time payment for clothing, food, and groceries
- One time bill payment
- Services such as insurance, mortgage, rent, and utilities
- Easy amount transfer
- Email money transfer and receivable
Which Option Suits You The Best?
We understand the offers mentioned above can be scary if you have not heard of them before. Contact Merrick Financial Inc. practices in fee-based financial planner services. Our investment and financial services will turn your dreams into reality in no time.