Canada Savings Bonds A Lacklustre Approach to Saving

[Tony The Bot]

Canada Savings Bonds A Lacklustre Approach to Saving
Posted via Canadian Content

Canada Savings Bonds (CSBs) were once the way for millions of Canadians to save money. It was guaranteed and secure, but now, where's the savings?

As you know, interest rates are near their lowest in history, but that does not mean that there aren't alternative methods of saving up your money. CSBs will actually cost you money with current rates at a whopping 0.65% and their cousins "Premium Bonds" barely giving a 1.3% return how can anyone save money? It is a sad fact that CSBs are not making anyone money besides the government who is issuing them.

At one point, the rates being given by CSBs were pretty good and sometimes bettered than what the banks were offering, but right now, banks are beating bonds. The only upside is sometimes the rates do go up and can offer, but why take the chance? Bonds also are locked in for a year and if you need emergency money, you're out of luck.

There are other ways you can put your money to good use such as:

• Open a high interest savings account (HISA)
• Purchase GICs
• Purchase mutual funds (most funds require you to leave money for 90 days)
• Purchase stocks that pay dividends
• ETFs or Index Funds

Purchasing mutual funds or stocks or ETFs do involve risk as prices do vary but still they could be used to save and even make some money. HISA are becoming quote the norm nowadays with such companies as ING Direct, ICICI bank, or sometimes a financial trust such as Achieva Financial can give you much better rates and the flexibility you need.


Original Article: http://www.canadiancontent.net/commtr/canada-savings-bonds-lacklustre-approach-saving_1011.html

 

[Spade]

At interest rates of 0.65% it would take 107 years to double your money. But if you invested a million dollars in these bonds, assuming an average inflation rate of 3% (historical average), the $2 000 000 dollars you'd have would be approximately worth $84 615 in today's currency.

 

[damngrumpy]

Actually they are good for introducing the saving concept to children just to get them
used to the idea of saving a bit of money. It is easy to then explain the interest
concept, but not for much else I am afraid.

 

[Indie]

Offering 0.65% in an inflationary environment is not only stupid, it's criminal. The fact that the Fed and prov govs advertise through most media as a "safe" investment is ridiculous. you are not lending money but "giving" money to the government. A clever way to tax the people further.

Can only be profitable in a deflationary environment and the government made it clear it wouldn't allow that.

so, who's buying?

 

[Spade]

YouTube - Rick Mercer Report : Canada Savings Bonds