Before you choose an investment that pays interest, try to work out what you’ll likely make on it. You need to know three things:
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How much am I going to invest?
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How many years am I going to invest this money?
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What interest rate will I get each year?
Example: Let’s say you plan to keep $1,000 in a savings account for one year. It will earn 3.5% interest. How much will it be worth at the end of that time period? To calculate, multiply $1,000 by 0.035: $35. Your savings after one year: $1,035.
Remember: Interest compounds each year you save.
That means you will make interest on the interest you earn every year. This can really help your savings grow.
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Here are some online calculators that will help you calculate interest.
All these calculators need you to enter the rate of interest. For guaranteed investments that pay interest, such as bank deposits, GICs, and bonds, call your financial institution or get the current rates from their website. You can also find many rates on the Internet. Here are some good websites to try.
- Bank of Canada – Rates and Statistics: View current Canadian or US interest rates, Canadian government bond rates, and T-bill rates. View historical rates for the past 10 years.
- Canoe Money – Rates: Compare posted rates for GICs, savings accounts, loans, and mortgages at various financial institutions.
- CANNEX: Compare posted rates for GICs, savings accounts, chequing accounts, credit cards, loans, and mortgages at various financial institutions.