Schedule for $100,000 on $60,000 income with a 3.5% HISA
| Years | 10% savings ($500 monthly) | 15% savings ($750 monthly) | 20% savings ($1,000 monthly) |
| 1 | $6,517 ($17 interest) | $9,776 ($26 interest) | $13,035 ($35 interest) |
| 2 | $12,746 ($246 interest) | $19,118 ($368 interest) | $25,491 ($491 interest) |
| 3 | $19,192 ($692 interest) | $28,788 ($1,038 interest) | $38,383 ($1,383 interest) |
| 4 | $25,863 ($1,363 interest) | $38,795 ($2,045 interest) | $51,727 ($2,727 interest) |
| 5 | $32,729 ($2,269 interest) | $49,153 ($3,403 interest) | $65,537 ($4,537 interest) |
| 10 | $71,094 ($10,594 interest) | $106,640 ($15,890 interest) | $142,187 ($21,187 interest) |
| 15 | $116,612 ($26,112 interest) | $174,918 ($39,168 interest) | $233,224 ($52,224 interest) |
| 20 | $170,673 ($50,173 interest) | $256,009 ($75,259 interest) | $341,346 ($100,346 interest) |
| 50 | $788,780 ($488,280 interest) | $1,183,170 ($732,420 interest) | $1,274,082 ($733,082 interest) |
Of course, the more you possibly can save of your total income, the more compound interest will make it easier to speed up your progress toward your first $100,000. According to the table, the $60,000 earner who saves the advisable minimum of 10% will save $100,000 by yr 14, whereas a more aggressive approach that saves 15% ($750 monthly vs. $500 -dollar) will get him there in nine years.
The best approach to invest $100,000 in Canada
How must you invest your first $100,000? It relies on your goals, how much and the way often you contribute to the investment account, and your schedule.
If you ought to buy a house or condo, the primary home savings account (FHSA) is the perfect account to store those savings, says Sather. “It gives you the perfect of all worlds, but you might be limited to $8,000 per yr and a maximum of $40,000. So that only brings you to $40,000, not $100,000.” In this case, he recommends supplementing this with a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP).
“A TFSA is a no-brainer because you put the money in it and it’s flexible; You can take it out,” Sather says. He adds that RRSPs are useful for medium to long-term goals comparable to retirement, education or a house. In the case of faculty or home ownership, you possibly can borrow money out of your RRSP for these goals (through the Lifelong Learning Plan and Home Buyers’ Plan, respectively). However, it’s essential to pay this a reimbursement over a certain time period – or report it as income in your tax return.
If the goal is to own real estate, having each an FHSA and a TFSA is the approach to go, he says. As for the automobile, Sather recommends a TFSA. But for retirement planning, you need to concentrate to RRSPs and TFSAs, and likewise invest with a non-registered (taxable) account that has no contribution limits. “The TFSA makes sense because you don’t pay taxes on the gains and interest you make, and you get your withdrawn contribution room back the following year after the withdrawal,” says Sather. (Not sure which account you wish? Check out this TFSA vs. RRSP comparison.)
Sather emphasizes the importance of finding the perfect rates of interest at online banking institutions along with your brick-and-mortar banks, which regularly provide higher returns. Take, for instance, these top 5 highest interest savings accounts in 2024, with rates of interest starting from 3% to five%.
Working with a financial advisor is one other tip that will offer you a greater return. “The interest rates that banks offer their customers are almost double, if not triple, what customers receive from the bank alone,” says Sather. “Banks are offering their advisors 4.65% on their high-yield savings accounts, versus 2% or less for those in branch.”
