Thursday, 6 December 2018

$0.41 Vs $9.58

Okay, so this is a blog entry to say that it really does pay to look at how much your savings accounts are paying you. 

(Yes, they are supposed to be paying you to use your money).

This is the tale of two Savings Accounts 

1) Mid-Term Account

This is a regular savings account that was touted as a “High Interest” savings account when I signed up for it . . . it pays me 0.5% interest. 

The upside of this account is that I can transfer money in and out of it instantly with no fuss or penalty.

2) Long-Term Account  

This is actually my TFSA (Tax Free Savings Account). It is kinda like an RRSP but you can take money out at no penalty (well, as long as it has been in there for more than 30 days). 

I use a “High Interest Savings Account” in there that is traded like a Mutual Fund, yet is actually a regular savings account. It pays me (currently) 1.6%.

The drawback with this account is that I have to plan ahead to get at this money. 

For one, I have to stop putting money into it over thirty days before I plan to take any out. For another it takes two business days to actually get my money out of it.

So, why am I telling you this? Well, it’s not to brag, not at all. 

At the end of each month into each account is the interest that each account has earned. This is the interesting part. 

My Mid-Term Savings had more money in it, yet paid me $0.41 interest for last month. Yet my Long-Term Account which had less money in it paid me $9.58.

Again, not enough to retire on, but still enough to take notice and plan accordingly. This is why I keep enough money for immediate access in an emergency in my Mid-Term Account.

The rest I will put in my TFSA until it is maxed out. After that I will get a standard investing account and continue to put money in it in the same “High Interest Account/Mutual Fund . . . thing.” 

What I need is something where my balance is guaranteed, it pays me decent interest as I continue to put money into it, yet still I can access that money if and when I want.

After all, I plan on starting to spend that savings in four years. As in when I start the Homesteading Phase of this journey.

So, something to think about when you look at your own savings (however large or small it may be). 

You can get better than negative interest for your savings, but you just have to look for it.

As always: Keep your head up, your attitude positive, and keep moving forward!

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