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Deciding where to save: Raymond's story

Deciding where to save: Raymond's story 

What will Raymond do with his $1,000 bonus? He has wanted a new computer for a while, and now he can afford to buy it. Still, he hasn’t quite made up his mind if this is what he wants to do with his bonus. He decides to put his money into a short-term investment while he shops around.

After a visit to his bank and some searching on the Internet, Raymond has made a list of his top choices and the best interest rates he can get. Here’s what he finds:

Type of investment

Value of Raymond’s investment now

Rate of return

How much will Raymond have after one year

Savings account

$ 1,000.00

0.70%

$1,007.00

High-interest savings account

$ 1,000.00

3.15%

$1,031.50

Canada Savings Bond

$ 1,000.00

2.75%

$1,027.50

Guaranteed Investment Certificate (one-year)

$ 1,000.00

3.20%

$1,032.00

 

Raymond’s decision: He puts his $1,000 into a high-interest savings account at an Internet-based bank. If he decides to get the computer, he can get his money out fast, without any penalty. And, he gets the highest interest rate without any service fees.