Savings account compairison

Let’s say you have a spare $5,000.  You want this money for travel… or a down payment on a car, or something else in the one to two year time frame.  What’s the best current bet for getting a little bit of growth over a year?

Mutual funds and stocks could lose value.  That’s probably not a good bet over the short term.  Bonds could work in some situations, so that may warrant investigation.  For now, I’m just going to focus on savings accounts and the tax implications.

All interest rates were captured on 3 Nov 2012.  Let’s take a look at a few options.  Let’s also have a look at tax implications for 2012.

Assumptions:

  • One year investment period
  • Marginal tax rate is 32% (22% federal, 10% provincial)
  • There is contribution room for a TFSA
  • $5000 to invest
  • There is NO inflation adjustment necessary

Some Options:

Institution Rate (%) Interest ($) Taxes ($) Net ($)
AMA/Bridgewater Bank 1.85% $92.50 $29.60 $62.90
Canadian Direct Financial 1.90% $95.00 $30.40 $64.60
Canadian Direct Financial TFSA 3.00% $150.00 $0.00 $150.00
ING Direct Savings 1.35% $67.50 $21.60 $45.90
RBC eSavings 1.20% $60.00 $19.20 $40.80

Discussion:

I find it odd that some institutions are offering a *higher* interest rate for TFSA savings accounts. I won’t fight it – it’s a fantastic option for those who are saving for the short term. Even as an emergency fund the TFSA offers a significant advantage over taxed savings accounts. Naturally, there are limitations placed on TFSAs and it’s important to work within those limitations to ensure that there are no service fees applied to an otherwise exceptional deal.

Why the disparity in interest rates?  I can only assume that it’s because larger banks can get away with offering lower rates and still attracting customers.  Perhaps the inconvenience of dealing with multiple institutions is worth the cost of not keeping up with the rate of inflation.

CDQ: NTP will save you time.

In my second edition of Cisco Done Quick (CDQ) I will talk about how NTP – the network time protocol – will save you time.

Debugging network problems can be challenging. It’s made even worse by time zones and daylight savings time.  Worse still by a clock that has drifted.

Some older Cisco IOSes don’t know the current rules for daylight savings. They can be configured, if necessary. Start with setting a timezone and setting the rules for Mountain Daylight Time (or your time zone as appropriate):

clock timezone MST -7 0
clock summer-time MDT recurring 2 sunday march 02:00 1 sunday november 02:00 60

Next, setup NTP, if you don’t already have it:

ntp server [vrf MANAGEMENT] aaa.bbb.ccc.ddd
[ntp source gig 0/0]
[ntp logging]

Setting the VRF and source interface are only needed if you are using a dedicated management interface. The “ntp logging” line is only useful for debugging information. Remember to TURN IT OFF once you’re satisfied that everything is working.

Doing a “show clock” will tell you whether or not NTP has been able to update your clock.

So how does this save you time?

Well, with properly annotated timezone information and a synchronized clock, you’ll spend less time debugging and converting times or correcting for a drifting system clock.

UPDATE – 26 November 2012:

If your device is already using DNS, rather than hard-coding an IP address for the NTP server, I suggest you pop on over to ntp.org.  For Canadian NTP servers, look here.

Using the NTP servers in a pool will make things a little more fault tolerant.  It will help with:

  • NTP server drift (yes, it does happen)
  • NTP server outages (this happens more regularly)

The config will end up looking more like this:

ntp server [vrf MANAGEMENT] 0.ca.pool.ntp.org
ntp server [vrf MANAGEMENT] 1.ca.pool.ntp.org
ntp server [vrf MANAGEMENT] 2.ca.pool.ntp.org
ntp server [vrf MANAGEMENT] 3.ca.pool.ntp.org

 

The reading list

There are a lot of things I would like to read.  It’s often hard to find time, but find time one must.  This is essentially a public to-do list for what I have read, and what I hope to read. I will not normally include fiction in this list.

If you know me, then you likely know just how busy I am.  I implore you not to give me books.  I have more than enough, and I have scarce little time to do any reading.

Title Recommended by Read?
Race Tech’s Motorcycle Suspension Bible 2012
The Moneysense guide to Investing in Real Estate(2012) 2012
The 5 Love Languages S.O. 2012
The Moneysense guide to the perfect portfolio (2011) 2012
Total Control: High Performance Street Riding Techniques 2012
The Millionaire Next Door Parents (b), RS[3], CC[2] Dec 2012
The Moneysense guide to investing in stocks Dec 2012
The Smartest Investment Book You’ll Ever Read RS[3] No
Why Smart People Make Big Money Mistakes… RS[3] No
Investing for Canadians for Dummies CMF[1] No
Stock Investing for Canadians for Dummies CMF[1] No
The Lazy Investor (DRIP) CMF[1] Nov 2012
One Up On Wall Street CMF[1] No
The Little Book that Builds Wealth CMF[1] No
The Single Best Investment CMF[1] No
The NAKED Investor CMF[1] No
The Four Pillars of Investing CMF[1], CC[2] No
The Intelligent Investor CMF[1], SF[4] (b) No
Stocks for the Long Run CC[2] Aug 2016
A Random Walk Down Wall Street CC[2], SF[4] (b) No
The Warren Buffet Way CC[2] No
The Future for Investors CC[2] No
The Little Book of Common Sense Investing CC[2] No
The Investment Zoo CC[2] No
The Wealthy Barber CC[2] No
Spend Smarter, Save Bigger CC[2] No
Internet Peering Playbook 2013 Edition B. Kitella Aug 2013
Getting to yes Parents No
Wireshark Network Analysys – 2nd Ed. July 2013
Don’t shoot the dog TwoTonTim Sept 2013
Breaking the time barrier SF[4] Sept 2013
Your Financial Battle Plan Sandeep Jan 2014
Learn Ruby the Hard Way Brad H. May 2015
Pro Git May 2015
CCIE R&S v5.0 Official Cert Guide, Vol 1, 5th Ed. June 2015
The Phoenix Project JS Oct 2015
CCIE R&S v5.0 Official Cert Guide, Vol 2, 5th Ed. Nov 2015
The Goal Jan 2016
High-Tech Heretic: Reflections of a Computer Contrarian SF April 2016
So good they can’t ignore you SF May 2016
The Age of Selfishness CMB May 2016
To sell is human CMB July 2016
The Now Habit Dec 2016
Deep Work Dec 2016
How to Become a Straight-A Student Apr 2017
Norwegian Wood: Chopping, Stacking, and Drying Wood the Scandinavian Way May 2017
A Mind for Numbers Mom August 2017

[1] Canadian Money Forum
[2] Candian Capitalist
[3] Ramit Sethi
[4] superfrink