Tag Archives: high-interest savings accounts

How to Save for a Big Purchase without going into Debt

Posted By Financial Independence Hub | December 4, 2024

By Louis Wheeler

For Financial Independence Hub

It is possible to amass enough money to buy a car, renovate one’s house, or go on a dream vacation without borrowing money to finance the exercise. When one wants to make such a large purchase, one should lay down a plan, change one’s spending pattern, and dedicate oneself.

Guidelines for Saving up for big Expenses

Planning for a big project can be financially exhausting. Here are some things one needs to do to save for their next purchase:

Know your objective and establish a budget

First, identify the amount you wish to save and how long you want to achieve that. Subtract the number of months available before the target date from the total amount and divide the result by the number of months available to discover how much must be saved every month. This will also provide you with a specific, achievable task at hand.

Get a new checking or better yet, a high-interest savings account.

You should use another account and open it simply for this particular purchase. The money needs to be kept in separate accounts to avoid converting them to other assets by mistake, as well as to be able to monitor performance. You might want to consider selecting a high-yield savings account for further growth. You can open a high interest savings account at koho for your next big project.

Cut back on non-essentials

Take your current spending habits and determine which ones can be sacrificed quickly. Micro-level decisions include eating out less, canceling subscriptions, or looking for cheaper or free entertainment options.

Automate your savings

Ensure you create a recurring payment method from your main checking account to your savings account on paydays. Automating makes saving very easy and guarantees that no time is given to destroy the plans that you have in mind.

Boost income with side gigs

Perhaps moonlighting, part-time work, or even some freelancing kind of occupation. Any additional money earned can be added to the savings amount, which can be achieved without too much sacrifice of daily expenses. You can also earn some extra cash by selling unwanted items or offering services such as pet-sitting, tutoring, or freelance writing.

Monitor and adjust

Review your savings plan every month to see if it is still realistic. Life gets in the way sometimes and unexpected expenses may arise, so be prepared to make necessary adjustments to your savings plan accordingly. It’s important to continuously monitor your progress and make changes as needed to stay on track towards reaching your target date. Continue Reading…

Maxed out RRSP and TFSA? Non-registered investments vs. HISAs or GICs

Posted By Financial Independence Hub | June 14, 2019

By Julia Faletski

(Sponsor Content)

So, you’ve maxed out your registered retirement savings plan (RRSP) and tax-free savings account (TFSA). Maybe you’re a diligent saver. Or you’ve just sold a home or a business. Maybe you’ve inherited wealth. Whatever the reason, you’ve got additional money to invest. And if you were thinking about putting it into a high-interest savings account (HISA) or GIC, think again. There are better ways to grow your money.

Earn more with Non-Registered Investments

Any investment that generates positive returns will bring you closer to your financial goals. And while GICs and HISAs do generate small but guaranteed returns, historically you’re much better off generating growth in an investment than letting it sit in a slow-to-grow savings account.

The chart¹below compares the growth and performance of a non-registered investment, GIC and HISA overtime. While HISAs and GICs promise consistent returns, you can see that the non-registered investment account comes out significantly ahead.

How are non-registered investments, HISAs & GICs taxed?

The most common types of investment income include: dividends, interest and capital gains. And while the income earned from investments is always subject to tax, not all forms of investment income is taxed the same way. Some investment income attracts less tax.

Investment income from HISAs and GICs is considered interest and the taxes owed are based on your marginal tax rate (which varies by income and province). This is noteworthy because this type of tax is the most expensive.

Non-registered investments have a unique advantage in that they can earn a blend of different types of income as a result of what’s held within the account (the most common includes dividend income and capital gains). This is an advantage because the gains earned are taxed at different rates, opening up an opportunity to reduce the taxes paid on the income earned. Continue Reading…

A savings account that rewards inertia

Posted By Robb Engen | June 4, 2015

By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

Canadians have few reasons to save these days. Cheap borrowing coupled with feeble returns on your savings deposits makes it hardly seem worthwhile to park your cash in a savings account. Some banks have decided to punish savers even further by charging fees just for moving your money around.

Gaining Momentum Through Inertia

But one bank has turned to the carrot rather than the stick approach to help its customers save. Scotiabank, which already boasts the best suite of rewards credit cards, in addition to its Moneyback chequing account, has raised the stakes with a new high-interest savings product called the Momentum Savings Account. Here’s how it works:

Using a unique incentive that rewards “inaction”, or our tendency to drift toward financial inertia, the Scotiabank Momentum Savings Account pays a bonus interest rate for customers who do not make a withdrawal in a 90-day period.

The account pays regular interest of 0.75 percent when you keep a balance of $5,000 or more. If you resist the temptation to withdraw from your account for 90-days, you’ll receive a 0.75 percent bonus, for a total interest rate of 1.5 percent.

Customers who open an account by June 15^th, 2015 will get an additional 0.5 percent bonus, for a total of up to 2 percent until July 31^st, 2015.

Momentum Savings also comes with an “Account Tracker” that customers can access online and through their mobile app. It provides a visual “countdown” to the extra interest payment, so you can see when you’ll receive the extra interest. With this tool, you can be strategic about when to withdraw from the account to ensure maximum savings.

Scotia Momentum Savings Account