Efficiently saving your money can accelerate your progress towards achieving financial milestones such as accumulating the necessary down payment for your dream home, launching a business venture, or retiring early. Whatever your aspirations may entail, our calculator below can provide precise insights into what it takes to attain them, considering factors like your account’s Annual Percentage Rate (APR), initial deposit amount, and desired time horizon. Additionally, it can forecast your accrued savings over time based on your anticipated saving habits.
Harness the power of smart saving to turn your financial goals into reality.
Planning a sabbatical? Saving for a down payment on a house? Discover what it takes to achieve your financial goals with our intuitive calculator. Simply input your savings plan and visualize your financial progress through interactive graphs. Click the report button for detailed insights into your plan and actionable tips to ensure it stays on track. Start planning your financial future today.
The amount you wish to have in savings at the end of this savings plan.
The number of years you have to save.
Total you currently have saved toward this savings goal.
The amount you will contribute each month to your savings. This calculator also assumes that you make your contribution at the beginning of each month.
This is the annually compounded rate of return you expect from your savings or investment. The actual rate of return is largely dependent on the type of investments you select. For example, the total return including dividends of the S&P/TSX Composite Index for the 10 year period from December 31, 2012 through December 31, 2022 was 7.6% (source spindices.com). Savings accounts at a bank or credit union may pay as little as 2% or less. It is important to remember that future rates of return can’t be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.
What you expect for the average long-term inflation rate.
To calculate the monthly savings required to reach a specific goal:
For example, suppose you’re saving for a home down payment of $150,000. You’ve already saved $25,000 and aim to achieve the full down payment within 10 years, with an interest rate of 3.00% on your savings account. The calculator suggests you need to save $850.12 each month to reach your goal.
Adjusting the slider to extend the timeline will reduce the monthly savings requirement. Similarly, tweaking the Annual Interest rate illustrates the impact of obtaining a better interest rate on lightening the savings burden.
To calculate total savings based on a monthly deposit:
For instance, if you’re confident you can save $150 each month, with $15,000 already saved, and plan to deposit into a 4.00% savings instrument for 10 years, the calculator projects a total contribution of $33,000 through monthly deposits, with an additional $11,449.96 earned in interest. This results in a total savings amount of $44,449.96, showcasing the power of compounded interest and the impact of increasing monthly contributions over time.
A high-interest savings account, often abbreviated as HISA, is a widely recognized financial tool among Canadians. The top Canadian HISAs typically feature interest rates hovering around 2.00%, making them ideal for both long-term and short-term savings objectives. However, it’s essential to note that HISAs share similar characteristics with standard savings accounts, including the notion that they are not intended for daily transactions like a chequing account.
A Tax-Free Savings Account (TFSA) holds a unique position in Canadian finance, as it offers the advantage of tax-free growth on both interest earned and investments held within the account. This means individuals can save at competitive interest rates and withdraw funds without incurring taxes. However, it’s important to recognize that TFSAs are best utilized as long-term investment vehicles due to contribution limits.
In Canada, numerous TFSA options abound, offering high interest rates and additional benefits such as fee-free withdrawals.
A Guaranteed Investment Certificate (GIC) is a common investment vehicle provided by banks and financial institutions. Often offered alongside High-Interest Savings Accounts (HISAs) and Tax-Free Savings Accounts (TFSAs), GICs can be held within these savings accounts intentionally.
Unlike the flexibility of HISAs and TFSAs, GICs require you to commit a minimum amount of cash for a predetermined period to earn a typically higher interest rate. In Canada, competitive GIC rates can exceed 3.00% for terms extending beyond a few years.
For parents aiming to save for their child’s future education, a Registered Education Savings Plan (RESP) offers tax-free benefits akin to those of an RRSP or TFSA. This includes exemption from capital gains taxes on investments held within the RESP and tax-free growth on interest earned.
A key feature of the RESP is the Canadian Education Savings Grant (CESG), wherein the government matches up to 20% of the sponsor’s contribution annually, to a maximum of $2,500. This translates to $500 in complimentary funds towards your child’s education each year, although there’s a ceiling on the total CESG amount. Additionally, larger grants are available for low-income families.
Canada is fortunate to offer a diverse range of complementary savings and investment options, featuring tax-advantaged structures and high-interest features. These options incentivize individuals of all income levels to save diligently. Whether your aim is retirement, education savings, or general wealth accumulation, it’s never too late to begin organizing and optimizing your finances.
The content provided on Myfinancesguru.com is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.
