Finance - Finance - Savings and InvestingSavings and Investing

FactFact

There are two kinds of money problems.There are two kinds of money problems.

Which one do you want?Which one do you want?

1.1. Not enough money?Not enough money?

2.2. Too much money?Too much money?

SavingSaving

AdvantagesAdvantages Money is protected Money is protected

against lossagainst loss Interest is paid by the Interest is paid by the

financial institutionfinancial institution

DisadvantagesDisadvantages Money loses purchasing Money loses purchasing

power over time due to power over time due to inflation.inflation.

If the current inflation rate If the current inflation rate is 2.5% and the financial is 2.5% and the financial institution is paying you institution is paying you 2%, your money is losing 2%, your money is losing purchasing power.purchasing power.

Saving involves safely putting money aside for future use. For example, depositing money into a savings account which pays interest of 1.5%.

Savings PlansSavings Plans

1.1. Savings AccountsSavings Accounts

2.2. Term DepositsTerm Deposits

3.3. Guaranteed Investment Certificate (GICs)Guaranteed Investment Certificate (GICs)

4.4. Registered Retirement Savings Plan (RRSPs)Registered Retirement Savings Plan (RRSPs)

5.5. Registered Education Savings PlanRegistered Education Savings Plan

(RESPs)(RESPs)

6. Tax Free Savings Account (TFSA)6. Tax Free Savings Account (TFSA)

InvestingInvesting

AdvantagesAdvantages Investments often pay Investments often pay

a higher rate of a higher rate of return. (higher return. (higher interest)interest)

Investments can grow Investments can grow at or exceed the rate at or exceed the rate of inflationof inflation

DisadvantagesDisadvantages The rate of return is The rate of return is

not guaranteednot guaranteed There is some risk of There is some risk of

losing part or all of the losing part or all of the money.money.

Investing is using your savings to earn extra income that will grow over time.

Investing PlansInvesting Plans

1.1. Investment in stocks/sharesInvestment in stocks/shares

2.2. Mutual FundsMutual Funds

3.3. BondsBonds

4.4. Index FundsIndex Funds

5.5. CollectiblesCollectibles

Smart investors have a combination of Smart investors have a combination of savings plans and investmentssavings plans and investments

An individual’s short and long-term goals An individual’s short and long-term goals and plans impact how savings and and plans impact how savings and investments are distributed.investments are distributed.

The Need For a Savings PlanThe Need For a Savings Plan

Savings PlanSavings Plan Systematic or regular habit of putting money aside to Systematic or regular habit of putting money aside to

reach a financial goal.reach a financial goal.

Why?Why?1. Emergency needs1. Emergency needs2. Short and long-term goals 2. Short and long-term goals 3. Security3. Security4. Future needs4. Future needs

Decisions you need to make:Decisions you need to make: How much to saveHow much to save What you saveWhat you save Where you saveWhere you save

Emergency NeedsEmergency Needs

Loss of family income due to death, Loss of family income due to death, injury, or illnessinjury, or illness

Life and health insurance does notLife and health insurance does notalways cover all the costsalways cover all the costs

Unexpected hardships such as gettingUnexpected hardships such as getting fired or laid off from a job fired or laid off from a job

Wanting to quit a job for ethical orWanting to quit a job for ethical or personal reasons personal reasons

How much savings do I need?How much savings do I need?

Ideally, people would be Ideally, people would be wise to have 3 - 6 wise to have 3 - 6 months salary in savings.months salary in savings.

If a job is lost, one’s If a job is lost, one’s savings would provide savings would provide until a new job is likely until a new job is likely found.found.

Short and Long-term GoalsShort and Long-term Goals

Short Term GoalsShort Term Goals Purchase of relatively Purchase of relatively

inexpensive items inexpensive items within a short period within a short period of time of time

Examples include:Examples include: Concert tickets, Concert tickets,

bicycle, televisionbicycle, television

Long-Term GoalsLong-Term Goals Purchase of more Purchase of more

expensive items in expensive items in more than a year’s more than a year’s time.time.

Examples include:Examples include: Car, house, post-Car, house, post-

secondary school, secondary school, retirementretirement

Security and Future NeedsSecurity and Future Needs

Many people who plan financially for their future are happier because they spend less time worrying about their financial future.

David Chilton’s best selling book, The Wealthy Barber, states people should pay themselves first – take 10% of your earnings as soon as you get it and put it aside in savings or an investment plan.

If you get into the habit of doing this, you never get used to having the money to spend in the first place.

Selecting a Savings PlanSelecting a Savings Plan

When trying to select which savings When trying to select which savings plan(s) to use, consider the following:plan(s) to use, consider the following:

1. Rate of return (interest rate) and how1. Rate of return (interest rate) and how interest is calculated interest is calculated

2. Safety2. Safety

3. Liquidity3. Liquidity

Interest / Rate of Return/ YieldInterest / Rate of Return/ Yield

Interest is money received over time for letting Interest is money received over time for letting others borrow moneyothers borrow money

Consumers borrow money from banks and pay Consumers borrow money from banks and pay interest in addition to paying the initial amount interest in addition to paying the initial amount borrowed, which is called the principal.borrowed, which is called the principal.

Banks pay interest to consumers who deposit Banks pay interest to consumers who deposit money into banks, who then use it to lend to money into banks, who then use it to lend to others at a higher interest rate.others at a higher interest rate.

InterestInterest

Interest is expressed as a percentage of the Interest is expressed as a percentage of the original investment (i.e. 2% of $)original investment (i.e. 2% of $)

This is called a rate of return or yield.This is called a rate of return or yield. Interest rates are based on a one-year time Interest rates are based on a one-year time

period. (1 year = 12 months = 52 weeks = 365 period. (1 year = 12 months = 52 weeks = 365 days)days)

Example:Example: A savings account yields an annual return of 3%. A savings account yields an annual return of 3%. The rate of return on the savings account is 3%.The rate of return on the savings account is 3%.

Savings Accounts and InterestSavings Accounts and Interest

Actual earnings on savings accounts depends on when Actual earnings on savings accounts depends on when the bank calculates and pays the interest:the bank calculates and pays the interest:1. daily1. daily

2. weekly2. weekly3. monthly3. monthly4. annually4. annually

And how the bank calculates interest and may vary from And how the bank calculates interest and may vary from bank to bank from type of savings accounts. Interest bank to bank from type of savings accounts. Interest may be calculated in one of two ways:may be calculated in one of two ways:1. Simple Interest1. Simple Interest2. Compound Interest2. Compound Interest

Calculating Simple InterestCalculating Simple Interest

Simple Interest is calculated on the amount deposited by the consumer – also called the principal amount)

Simple Interest Calculation Interest = Principal x Rate x Time

I = P x R x T

a. Simple Interest calculated annually at 2% = 2/100 = 0.02 Balance of $2000 in my bank account I = 2000 x .02 x 12/12 = $40

b. Simple interest calculated monthly at 2% = 2/100 = 0.02 Balance of $1400 at the end of the month

I = 1400 x .02 x 1/12 = $2.33

c. Simple interest calculated weekly at 2% = 2/100 = 0.02 Balance of $1400 at the end of the week I = 1400 x .02 x 1/52 = 0.53 cents

Calculating Compound InterestCalculating Compound Interest

Interest is calculated on the principal amount plus any Interest is calculated on the principal amount plus any interest already earned.interest already earned.

You earn more interest in each payment period because You earn more interest in each payment period because you are earning interest on interest as well as your you are earning interest on interest as well as your principal.principal.

The more often the interest payment is made (i.e. The more often the interest payment is made (i.e. monthly vs. annually, or weekly vs. monthly, or daily vs. monthly vs. annually, or weekly vs. monthly, or daily vs. weekly), the more your money will grow because interest weekly), the more your money will grow because interest is being paid on top of interest more oftenis being paid on top of interest more often

Calculating Compound Interest Calculating Compound Interest If you deposit $1000 in a savings plan and leave it there for 5 years at 5% interest compounded annually, interest is compounded as follows:

Balance at the beginning

of the Year

During the Year Balance at the end of the year

Year 1 $1000.00 + 5% of $1000 = ?

+ .05 x $1000 = $50.00

= $1050.00

Year 2 $1050 + 5% of $1050 = ?

+ .05 x $1050 = $52.50

= $1102.50

Year 3 $1102.50 + 5% of $1102.50 = ?

+ .05 x $1102.50 = $55.13

= $1157.63

Year 4 $1157.63 + 5% of $1157.63 = ?

+ .05 x $1157.63 = $57.88

= $1215.51

Year 5 $1215.51 + 5% of $1215.51 = ?

+ .05 x $1215.51 = $60.78

= $1276.29

Calculating Compound Interest Calculating Compound Interest

If you deposit $1000 in a savings plan and leave it there for 5 years at 5% interest compounded monthly, interest is compounded as follows:

Balance at the beginning of the Month

During the Month Balance at the end of the month

Month 1 $1000.00 + 5% of $1000 = ?

+ .05 x $1000 x 1/12 = $4.166

= $1004.1666

Month 2 $1004.1666 + 5% of $1004.1666 = ?

+ .05 x $1050 x 1/12 = $4.1802

= $1008.3468

Month 3 $1008.3468 + 5% of $1008.3468 = ?

+ .05 x $1008.3468 x 1/12 = $4.2014

= $1012.5482

Month 4 $1012.5482 + 5% of $1012.5482 = ?

+ .05 x $1012.5482 x 1/12 = $4.2189

= $1016.7671

Month 5 $1016.7671 + 5% of $1016.7671 = ?

+ .05 x $1016.7671 x 1/12 = $4.2365

= $1021.0036

Compound Interest FormulaCompound Interest Formula

If the interest is compounded once a year: A = P(1 + r)n Where: P is the principal (the money you start with, your first deposit); r is the annual rate of interest as a decimal (5% means r = 0.05); n is the number of years you leave it on deposit – exponent n; A is how much money you've accumulated after n years, including

interest.

If the interest is compounded q times a year: A = P(1 + r/q)nq

Electronic Compound Interest/Future Value Calculator: http://www.moneychimp.com/calculator/compound_interest_calculator.htm

Note: Compound Interest is also referred to as Future Value.

Selecting the Savings PlanSelecting the Savings Plan

Note:Note: Compare different financial institutions savings plans in Compare different financial institutions savings plans in

order to find the one with the best rates for you.order to find the one with the best rates for you.

Some savings accounts require you to have a minimum Some savings accounts require you to have a minimum balance in order to receive a higher rate of interest on balance in order to receive a higher rate of interest on your account. (i.e. $4000 vs. $1000)your account. (i.e. $4000 vs. $1000)

Some savings plans require you to leave your money Some savings plans require you to leave your money with the financial institution for a minimum number of with the financial institution for a minimum number of years. The greater the principal and the longer you leave years. The greater the principal and the longer you leave it with the institution, the higher interest they will pay you.it with the institution, the higher interest they will pay you.

SafetySafety

Most savings plan deposits in banks, trust Most savings plan deposits in banks, trust companies, and loan companies are companies, and loan companies are protected by the Canada Deposit protected by the Canada Deposit Insurance Corporation (CDIC) – an Insurance Corporation (CDIC) – an agency of the federal government.agency of the federal government.

The financial institution pays for the The financial institution pays for the insurance - not you.insurance - not you.

SafetySafety

Depending on the province, the CDIC will insure your Depending on the province, the CDIC will insure your deposits at individual institutions up to a maximum deposits at individual institutions up to a maximum amount.amount.

Examples:Examples: The Nova Scotia Credit Union Deposit Insurance The Nova Scotia Credit Union Deposit Insurance

Corporation insures deposits up to $250,000.Corporation insures deposits up to $250,000. The Deposit Insurance Corporation of Ontario insures The Deposit Insurance Corporation of Ontario insures

deposits to $100 000 and an additional $100 000 for deposits to $100 000 and an additional $100 000 for each registered savings plan.each registered savings plan.

Depending on how much you have in savings, you may Depending on how much you have in savings, you may want to make deposits in several institutions.want to make deposits in several institutions.

LiquidityLiquidity

Liquidity refers to how easily you can Liquidity refers to how easily you can convert an item into cold hard cash quickly convert an item into cold hard cash quickly and without noticeand without notice

A house for example is not very liquid as it A house for example is not very liquid as it would take time to sell, whereas a would take time to sell, whereas a chequing account is liquid because you chequing account is liquid because you can withdraw the money immediately.can withdraw the money immediately.

LiquidityLiquidity

Should there be an emergency, it is Should there be an emergency, it is important for investors to try to keep some important for investors to try to keep some of their savings as liquid as possible.of their savings as liquid as possible.

Some savings plans are locked in for a Some savings plans are locked in for a certain amount of years and/or charge a certain amount of years and/or charge a penalty fee for early withdrawal of money.penalty fee for early withdrawal of money.

Savings PlansSavings Plans

1.1. Savings AccountsSavings Accounts

2.2. Term DepositsTerm Deposits

3.3. Guaranteed Investment Certificate Guaranteed Investment Certificate (GICs)(GICs)

4.4. Registered Retirement Savings Plan Registered Retirement Savings Plan (RRSPs)(RRSPs)

5.5. Registered Education Savings PlanRegistered Education Savings Plan

(RESPs)(RESPs)

Common Savings PlansCommon Savings Plans

Savings AccountSavings Account Interest may be calculated daily and paid at the end of Interest may be calculated daily and paid at the end of

each month, oreach month, or Paid on the average account balance during a specific Paid on the average account balance during a specific

time period; ortime period; or Paid on the minimum balance, and deposited in your Paid on the minimum balance, and deposited in your

account semi-annually on April 30account semi-annually on April 30thth and October 31 and October 31stst.. Interest rates vary from institution to institutionInterest rates vary from institution to institution Accounts may require a minimum balance in your Accounts may require a minimum balance in your

account at the end of each month (i.e. $5000)account at the end of each month (i.e. $5000) Online banks often have better interest ratesOnline banks often have better interest rates

Term Deposits and Guaranteed Investment Certificates Term Deposits and Guaranteed Investment Certificates (GICs)(GICs)

Both are savings plans where you deposit a fixed sum of money for a specific length of time (term), at a fixed rate of interest.

Terms may range from 30 days to 5years.

Usually, the shorter the term, the greater the deposit required and the lower the interest rate.

The greater the deposit and the longer the term, the higher the interest rate may be.

Some GICs are locked which means you can not access the money early.

GICs that are not locked will pay a lower interest rate and may have conditions upon when you may cash in your deposit.

$4 000 for 5 years at 5% interest

GIC

$3 000 for 3 years at 3% interest

GIC

Registered Retirement Savings Plan Registered Retirement Savings Plan (RRSPs)(RRSPs)

Introduced by the federal government in 1957 to encourage people to save for their retirement

Think of an RRSP as a money box. You can chose to invest your money in a number of things that will fit into your RRSP box.

Your RRSP may be made up of mutual funds, GICs, stocks, bonds, and index funds.

GICsStocks Bonds

RRSP

Other

RRSP’sRRSP’s

Helps you save money by allowing you to invest a Helps you save money by allowing you to invest a portion of your annual income without having to pay portion of your annual income without having to pay income tax on it.income tax on it.

Example:Example: Let’s say you pay 35% income tax on your incomeLet’s say you pay 35% income tax on your income

If you decide to contribute $5000 to an RRSP over the If you decide to contribute $5000 to an RRSP over the course of a year, you will receive from the government course of a year, you will receive from the government 35% of that $5000 on your income tax return for that 35% of that $5000 on your income tax return for that year. (5000 x 0.35 = year. (5000 x 0.35 = $1750)$1750)

The government has refunded you for the tax you paid The government has refunded you for the tax you paid on the $5000.00on the $5000.00

RRSPRRSP The sooner you begin investing money into an RRSP, the The sooner you begin investing money into an RRSP, the

longer time it has to grow until your retirement.longer time it has to grow until your retirement.

Interest or rate of return is earned on your deposits over Interest or rate of return is earned on your deposits over time.time.

Actual earnings depend on what type of investments make Actual earnings depend on what type of investments make up your RRSP.up your RRSP.

The government limits how much money you can contribute The government limits how much money you can contribute to your RRSP each year.to your RRSP each year.

If you already contribute to a company pension plan, you will If you already contribute to a company pension plan, you will not be able to put away as much into your RRSP.not be able to put away as much into your RRSP.

Currently, you can invest 18% of your income up to a Currently, you can invest 18% of your income up to a maximum of $22 000 a year.maximum of $22 000 a year.

Withdrawing Money from Your Withdrawing Money from Your RRSPRRSP

When you withdraw money on your RRSP, you must pay When you withdraw money on your RRSP, you must pay tax on it.tax on it.

You may withdraw money before retirement, but if you You may withdraw money before retirement, but if you are working, your annual income will likely be large are working, your annual income will likely be large enough that you may have to pay taxes in a higher enough that you may have to pay taxes in a higher income tax bracket resulting in paying more taxes.income tax bracket resulting in paying more taxes.

Since your income after retirement is usually lower than Since your income after retirement is usually lower than your income before your retirement, you may fall into a your income before your retirement, you may fall into a lower income tax bracket.lower income tax bracket.

2009 Federal Income Tax Brackets2009 Federal Income Tax Brackets

$10,320$10,320

$0$0

$40 726$40 726

$81 452$81 452

$126 264$126 264

NilNil

15%15%

22%22%

26%26%

29%29%

2009 Federal Income Tax Brackets2009 Federal Income Tax Brackets

Taxable IncomeTaxable Income Tax on this incomeTax on this income

$0 - $10,320$0 - $10,320 NilNil

$10 321 - $40 726$10 321 - $40 726 15%15%

$40 727 - $81 452$40 727 - $81 452 22%22%

$81 453 - $126 264$81 453 - $126 264 26%26%

Over $126 264Over $126 264 29%29%

Canadian Revenue Agency. “What Are Income Tax Rates For Canada 2009.” 24 August 2009. 16 February 2010 <http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html#provincial>

Registered Education Savings PlanRegistered Education Savings PlanRESPRESP

Anyone who wants to contribute to a child’s RESP can.

The contributor does not get a tax benefit like with an RRSP.

Child is the beneficiary because s/he will benefit from using the money for his/her future education costs.

The beneficiary must be a resident of Canada.

GICsStocksBonds

Family Plan RESP

Group Plan RESP

Individual Plan RESP

Other

GICsStocks Bonds

Other

GICsStocks Bonds

Other

RESP

Income earned from these investments is tax-free until the beneficiary begins to use it to pay for his/her future education.

Students do pay taxes on the income withdrawn from the RESP, but because students usually make minimal income while in school, the tax actually paid is minimal to none.

RESPRESPMain steps in opening an RESP:

1. Get a Social Insurance Number (SIN) for yourself and for anyone you name in your RESP.

2. Apply to the Canada Revenue Agency for the Canada Child Tax Benefit if your family net income is $74,357 or less. This form is generally provided at the hospital where your child was born.

3. Choose the RESP provider that best meets your needs. RESP providers include most financial institutions, such as banks or credit unions, as well as group plan dealers or financial services providers.

4. Decide on the type of RESP you want to open. (Individual, Group, or Family Plan)

5. Decide on the type of investment that will make your money grow.

6. Put some money into your RESP.

Sources: http://www.tax-services.ca/resp-canada.html http://www.canlearn.ca/eng/saving/cesg/faq.shtml

RESP RulesRESP RulesCurrent Rules on Contributions to RESP1. There is no annual limit on what one may contribute

except that:

2. The lifetime contribution limit is $50 000.

3. The government will also contribute up to $500 a year to a lifetime maximum of $7 200. The annual limit may go up to $1000 if there is unused grant from previous years.

Note: The government’s contribution to an RESP is called the Canada Education Savings Grant, (CESG).The actual grant will depend on a number of factors. See the following site for more detail:

http://www.canlearn.ca/eng/saving/cesg/faq.shtml

RESP RulesRESP RulesCurrent Rules on Accessing RESP funds:

1. The students can access up to $2,500 of their income and grants for each 13-week semester of study. Payments are referred to as Educational Assistance Payments (EAPs).

2. Usually, a qualifying educational program is a course of study that lasts at least three weeks in a row, with at least 10 hours of instruction or work each week. A program at a foreign educational institution must last at least 13 weeks.

3. Qualifying educational programs include apprenticeships, and programs offered by a trade school, CEGEP, college or university.

4. RESP funds can be used for full or part-time study in a qualifying program.

5. To find out more about qualifying educational programs contact the Canada Revenue Agency toll-free at 1-800-959-8281.

RESP RulesRESP Rules What if the child beneficiary chooses not to attend post-

secondary education?

1. 1. Since an RESP can stay open for up to 36 years, the money can be used if your child decides to attend school later.

2. 2. Use the money for a brother or sister who does continue education after high school

3. Transfer the money into a Registered Retirement Savings Plan (RRSP) to help you save for your retirement.

4. Withdraw your personal savings, tax-free. The unused government portion returns to the government.

Costs of Post-Secondary EducationCosts of Post-Secondary Education

Student Living at HomeYears until Child Attends a Post-secondary Four-

year College or Institution

Estimated Cost of University Program

Monthly Savings Needed

2 $36 000 $1350

4 $40 000 $681

6 $44 000 $449

8 $49 000 $337

10 $54 000 $266

12 $60 000 $221

14 $66 000 $186

16 $73 000 $161

18 $80 000 $144

Calculations assume a 5% annual increase in education costs including inflation and four years of education. It also assumes an 8% rate of return on investment savings, and the maximum amount invested to receive the total government grant under the CESG program

Student Living AWAY from HomeYears until Child Attends a Post-secondary Four-

year College or Institution

Estimated Cost of University Program

Monthly Savings Needed

2 $66 000 $2519

4 $73 000 $1270

6 $80000 $844

8 $88 000 $632

10 $97 000 $505

12 $107 000 $420

14 $118 000 $359

16 $130 000 $311

18 $143 000 $274

Calculations assume a 5% annual increase in education costs including inflation Calculations assume a 5% annual increase in education costs including inflation and four years of education. It also assumes an 8% rate of return on investment and four years of education. It also assumes an 8% rate of return on investment savings, and the maximum amount invested to receive the total government grant savings, and the maximum amount invested to receive the total government grant under the CESG program. Estimate includes tuition and books.under the CESG program. Estimate includes tuition and books.

Tax Free Savings AccountTax Free Savings Account(TFSA)(TFSA)

Introduced by the federal Introduced by the federal government in 2008government in 2008

Allows individuals to Allows individuals to invest and save money invest and save money and not have to pay tax and not have to pay tax on any returns (i.e. on any returns (i.e. interest) made.interest) made.

Money can be withdrawn Money can be withdrawn at any timeat any time

Deposit limit of $5000 Deposit limit of $5000 each year.each year.

TFSA may include a TFSA may include a savings account, GICs, savings account, GICs, stocks, bonds, and stocks, bonds, and mutual funds.mutual funds.

TFSA

GICsStocks Bonds

Savings Account

Mutual funds

http://cibc.com/ca/investing/tfsa/video/index.html?chapterID=0&WT.mc_id=tfsavideo-005

Common Forms of InvestmentsCommon Forms of Investments

1. Canada Savings Bonds and Canada Premium Bonds2. Corporate Bonds3. Stocks4. Mutual funds5. Real estate6. Collectibles

Note: Each type of investment has a different level of risk and expected

rate of return. Level of risk varies from guaranteed to get it all your money back

plus interest to losing everything) The safer the investment, the lower the return The more riskier the investment, the possibility for a larger rate of

return exists.

InvestingInvesting

Good investors Good investors diversifydiversify their investments their investments Investing in many different types of Investing in many different types of

investments to spread out the risk. investments to spread out the risk. If one investment is performing poorly, it may If one investment is performing poorly, it may

be balanced out by one that is doing wellbe balanced out by one that is doing well

Don’t put all your eggs in one basket !Don’t put all your eggs in one basket !

Canada Savings Bonds (CSB)Canada Savings Bonds (CSB)

CSBCSB A loan you give to the A loan you give to the

governmentgovernment

The government will repay The government will repay you the value of the bond you the value of the bond plus interest.plus interest.

The The maturity datematurity date printed printed on the bond is the date on the bond is the date when the bond becomes when the bond becomes due and is paid back to due and is paid back to you.you.

Canada Savings Bond (CSB)Canada Savings Bond (CSB)

Provincial and Provincial and municipal bonds are municipal bonds are also available, but also available, but less popularless popular

CSB’s can be CSB’s can be purchased at all purchased at all major financial major financial institutions, including institutions, including banks and credit banks and credit unions.unions.

CSBCSBAdvantagesAdvantages Guaranteed payment by the governmentGuaranteed payment by the government

Can be cashed at any time (very liquid)Can be cashed at any time (very liquid)

No interest will be paid if it is cashed out within the No interest will be paid if it is cashed out within the first three months of purchasefirst three months of purchase

Face value of the bond is the initial amount you Face value of the bond is the initial amount you loaned to the government.loaned to the government.

Can be purchased through automatic payroll Can be purchased through automatic payroll deductions arranged with your employerdeductions arranged with your employer

Can be purchased for as little as $100Can be purchased for as little as $100

Canadian Premium BondCanadian Premium Bond

AdvantagesAdvantages Offers the same Offers the same

security as a CSBsecurity as a CSB Offers a higher Offers a higher

interest rate but can interest rate but can only be cashed on the only be cashed on the anniversary of the anniversary of the issue date (when it issue date (when it was purchased) or was purchased) or during the 30 days during the 30 days after that date)after that date)

Corporate BondsCorporate Bonds

SourceSource

Wilson, Jack et al. Wilson, Jack et al. The World of BusinessThe World of Business, , 55thth Ed., Nelson Education Ltd., Canada, Ed., Nelson Education Ltd., Canada, 20072007