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Saving Money and Managing Debt

Where should I save my money? Linda's story Add to ...

When Linda checks her mail, she sees that the bank statement for her savings account has arrived. Linda has a keen interest in this account because she’s using it to save for a new car.

This month, she sees she has saved $6,800. She is pleased, but then she looks at how much interest she earned last month: just $2.83! That doesn’t seem like much.

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Linda decides she can do better. She picks three other options to compare:

Type of investmentHow much money will Linda invest?What return will she get?How much will Linda have in one year (before fees)?
Treasury bill (1 year)$6,8001.3%$6,888
Money market fund$6,8000.2%$6,814
Government of Canada bond that matures in 1 year$6,8001.4%$6,895

 

Source: Bank of Canada

Linda’s decision: She puts her $6,800 into a Government of Canada bond. She doesn’t feel there’s a lot of added risk and she wants to make more on her money than she can with the other choices. In a year, she may choose to do something different. She may even be ready to buy her new car.

Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca

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