Is this how RSP Short term (GIC) works?

[Clown Baby]

So here's the site:

http://www.ingdirect.ca/en/save-invest/rspstgic/index.html

I want to choose the 180 days option, since there's no fees, charges and it's free to use.

Anyways, it's guaranteed 0.75% interest.

However, having no experience in savings, is this how it works:

example: I invest $9000 on the first day and leave it there for 180 days (not touching it, depositing or withdrawing). So I will earn 0.75% interest each day, and exponentially growing quickly?

Day 1: 9000
Day 2: 9067.50
Day 3: 9135.51.....etc.

^^Is that correct?

[zero383]

I'm pretty sure all interest rates are annual, meaning you get 0.75% a year. Doing the math you'll get 0.37% for 180 days. After the 180 days you'll have $9033.30.

You're better off with an ISA (Investment Savings Account) with ING. You get 2.00% interest a year and the money isn't locked in. You are free to move it around whenever you want.

[tjthemanto]

So here's the site:

http://www.ingdirect.ca/en/save-invest/rspstgic/index.html

I want to choose the 180 days option, since there's no fees, charges and it's free to use.

Anyways, it's guaranteed 0.75% interest.

However, having no experience in savings, is this how it works:

example: I invest $9000 on the first day and leave it there for 180 days (not touching it, depositing or withdrawing). So I will earn 0.75% interest each day, and exponentially growing quickly?

Day 1: 9000
Day 2: 9067.50
Day 3: 9135.51.....etc.

^^Is that correct?

No that's not how it works . The interest rate of 0.75 % is yearly .

So your daily interest rate is 0.75/365 = 0.00205479452 % . So use that in the above calculation & not 0.75 % daily .

You are just better off opening an ISA with ING @ 2 % & withdrawing all your money out of it after 180 days if you want . ( There are no fees or charges for doing the same ) . You will earn more that way since its 2 % as opposed to 0.75 % .


Current Interest Rate

90 days 0.75%
180 days 0.75%
270 days 0.75%

current per year interest rates
since 03/21/2009

[Clown Baby]

Okay, then I guess that makes more sense with the GIC thing.

Is the tax free ISA with ING 2.0%, compounded quarterly or just once a year?

If it's only compounded once a year, is it a good idea to open 2 savings account (similar rates at ING and elsewhere) to earn more interest?

[budfrogs]

GIC's are compounded significanly less then savings accounts usually.

So if the rates are the same the savings account will give you a little bit more each year.

The one thing right now is interest rates keep going down. So if you lock in a rate with a GIC you will continue getting that rate until it matures. Although at .75% it isn't much!

INGs RSP ISA is paying 2% interests. That is quite a bit more then the short term GIC.

Remember once it is under the RRSP umbrella there is a penality if you want to take it out from the umbrella. (there are a few exceptions like first time home buyer)