1 / 3

Evaluating Savings Plans

LO#4. Evaluating Savings Plans. Rate of return (or yield) Percentage increase in value due to interest Compounding - interest on interest Effective Annual Rate (EAR) calculates the effective return taking compounding into effect. EAR = (1 +km)m – 1 m = number of periods in year

yukio
Download Presentation

Evaluating Savings Plans

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. LO#4 Evaluating Savings Plans • Rate of return (or yield) • Percentage increase in value due to interest • Compounding - interest on interest • Effective Annual Rate (EAR) calculates the effective return taking compounding into effect EAR = (1 +km)m – 1 m = number of periods in year km = rate of return for one period

  2. LO#4 Evaluating Savings Plans • Inflation • Compare return with inflation rate • Tax considerations • Taxes reduce interest earned • Liquidity • Ease with which you can convert to cash with a minimal loss of principal

  3. LO#4 Evaluating Savings Plans • Safety • Canadian Deposit Insurance Corporation (CDIC) insures up to a maximum $100,000 per person per financial institution • Restrictions and Fees • Delay between when interest earned and added to your account • Transaction fees for each deposit or withdrawal • Interest paid only with minimum balance

More Related