The majority of college and university students don’t have a lot of extra cash, but even if you only have a little savings from your summer or part time job, then now is the time to start investing.
Chequing
Let’s start with your chequing account. These are the most flexible type of account available. You can withdraw funds whenever you want. Almost every student has a chequing account, and those who don’t should open one. Most banks charge a nominal monthly fee for student chequing accounts – but if you want to save more, then open a Sprowt chequing account because there are absolutely no fees!
Savings
Savings accounts are a great option for students because these accounts earn a little interest and don’t require a large initial investment. Savings accounts don’t come with cheques or debit cards, but you can link it with your chequing account to make money deposits much easier. For example, you can set up an automatic monthly transfer of $25 or $50 automatically transferred from your chequing to your savings and you’ll soon find the savings start to add up.
GICs
Savings accounts are good when you have a few hundred dollars – but if you are lucky enough to have larger amounts, like $1,000 or more – you’re better off putting it somewhere where you can’t get your hands on it and where it can collect some decent interest. With a short term guaranteed investment certificate (GIC), or sometimes referred to as a Term Deposit, you can lock your investment for as long as you want – from 30 days to 5 years. Generally, the longer the term, the higher the interest rate. Remember though – if you withdraw the money before the term is over you’ll pay a penalty fee, so be sure that if you know you’ll need the money in say, one year, to pay your tuition – then only lock it in for the one year!
Tax Free Savings Accounts
The TFSA allows you to set money aside in say a GIC and watch your savings grow tax-free throughout your lifetime! Unlike a regular GIC, the TFSA is tax-sheltered which means that you don’t have to pay taxes on the interest that you earn. TFSA savings can be used to purchase a car, pay tuition and other school expenses or even take a spring break vacation.
Index-Linked Term Deposits
You can possibly earn higher interest than a regular term deposit, with index-linked term deposit because it’s a fixed-term investment that pays a return based on the performance of one or more stock market indexes. Simply put, it offers term deposit security with the potential of stock market returns. Index-linked term deposits are a great way to grow your money and meet your savings goals.
Talk to a Sprowtster or a PenFinancial Credit Union Advisor to help you figure out what type of investment approach is best for you.
