Common Savings
Plan
Read pages 441-445 & Complete the summaries.
How are all the savings plans
similar?
• Intended for people who don’t plan on
withdrawing the money very often
• Easy to open
• Pay a fixed rate of interest
• Protect your money against loss
Here are the main types of
savings plans:
1. Savings Account
• Often require a minimum monthly
balance before paying interest
• Rate of interest varies
• Lowest rate of interest compared
with other investments
2. Term Deposits and
Guaranteed Investment
Certificates (GIC’s)
• Deposit a fixed sum of money for a specific length of
time (30 days to 5 years) at a certain rate of interest
Term Deposits – discuss the length and relationship to
interest rates
• The shorter the term, the greater the deposit
required and the lower the interest rate
e.g. 1 year 0.4%
3 years 1.6%
5 years 2.1%
a) How are Term Deposits different
from GIC’s?
•Term deposits can be cashed-in
early, GIC’s can’t- Fixed Term
3. Registered Retirement Savings
Plan (RRSP)
• Encourages people to save for retirement
• Don’t have to pay tax on the money you
put in an RRSP
• You have to pay tax on the money when
you withdraw it (hopefully at retirement)
Registered Education Savings
Plan (RESP)
• Encourages saving for a child’s postsecondary education
• Income earned grows tax free until child
withdraws it
• Government contributes $400 for the
first $2000 contributed each year
Using The Internet; explain the
following:
• Canada Savings Bond
• A loan made by you to the government of Canada, which they
pay back with interest
• Cash out any time
• Corporate Bond
• A loan made by you to a corporation, which they pay back
with interest.
• TFSP – Tax Free Savings Account
• Started in 2009, any Canadian resident over the age of 18 can
put up to $5000 a year into the TFSP
• Money earned on investment in the account will be tax-free
meaning you’ll be able to withdraw money WITHOUT paying
tax
Define the following terms:
• Liquidity- The ability to convert an asset or
investment into cash quickly and easily
• Risk- how safe it is to put money into an
investment
• Rate of return- Interest expressed as a
percent of the original investment, also called
yield
Liquidity
__________________________________________________
Risk:
__________________________________________________
Rate of Return: _____________________________________________
Investment
Risk?
Liquidity?
Rate of Return/Yield?
Savings Accounts
Excellent
Excellent
Poor
Excellent
Good
Fair
Excellent
Fair
Good to very good
Excellent
Poor to fair
Good to very good
Excellent
Poor to fair
Good
CSBs
Excellent
Good
Good
Corporate Bonds
Excellent
Very good
Fair to good
Term Deposits/
Cashable GICs
Non-cashable GICs
RRSPs
RESPs
TFSA
Common Stocks
Preferred Stocks
Mutual Funds
Real Estate
Collectibles
Investing in a
Business
Good to very good Good
Good
Fair
Good
Poor to Excellent
Fair to good
Good
Good to very good
Fair to good
Good
Fair to excellent
Fair to Excellent Poor
Fair to Excellent
Poor to Excellent Fair
Poor to Excellent
Poor to Excellent Poor
Poor to Excellent