Investment Savings Accounts – Higher Yield, Higher SecurityOctober 16, 2012
Do you think of yourself as an investor or a saver? With an Investment Savings Account (ISA), you can be both! ISAs offer higher rates of return, and a higher degree of flexibility than RRSPs. Unlike most forms of investment, ISAs do not require that you lock in your funds, giving you the freedom to access your funds at any time by simply transferring them into your chequing account or another account online.
Whether it is large sums from the proceeds of a house sale or inheritance, or small sums of cash under your mattress, an ISA is ideal for any amount of money that you want to “park” for the short term before making any long-term decisions. The same is true if you have a substantial sum in a regular savings account. Transfer that money into an ISA, and you will have the same level of security and flexibility as before, but now your money is working harder for you.
Use an Investment Savings Account to create your virtual ‘Special Money Jar’.
Chances are, your grandparents had a ’special money jar’ where they would save up for a special item. An ISA can be your virtual ‘special money jar’, except that this one pays you interest. To make it especially easy and painless, set up a payroll deduction to put funds automatically into your ‘special money jar’. Even at just $50 per month, you will be surprised at how the money can add up.
You’ll want to make sure it is for a very specific goal. A newlywed couple, for example, used this concept for a 10th Anniversary gift; they put away $100 a month, and by the time their anniversary arrived, they had over $13,000 to go on a dream vacation. For another family, rather than giving in to the urge of buying that large-screen TV right away on credit, they decided to make “payments” into their Investment Savings Account and saved up for the TV over the course of a year. Not only did they earn money while they were doing it; they also saved a lot of money because they avoided high-interest credit card charges.
What could you do with your Investment Savings Account?