What you need to know
When making a major purchase, it's important to know where that money is coming from before signing on the dotted line. If your goal is to buy a car or plan a trip, you'll most likely be looking at a shorter timeline. With that in mind, it's important to look to low-risk investment options that offer steady returns.
For big purchases, like a car or trip, the timeline is usually shorter. It's important to establish a time frame to save for your big purchase so you can figure out how much you need to save on a monthly basis.
With shorter timelines, lower risk investments will help make sure you've saved enough and that the principal is secure.
Lower risk investment options can bring you strong, steady returns putting you on the right path toward your goal.
'Pros and cons' to using a loan for your purchase.
Borrowing money to make a large purchase definitely gives you more time to enjoy it, since you'll be buying it sooner. But the interest on your loan will increase the overall cost of your purchase. So you would have it sooner, but pay for it longer.
Savings? Or investments?
A savings account or Guaranteed Investment Certificate (GIC) are perfect for short-term goals. You have easy access to your money and they are low risk. Investments such as mutual funds are ideal for saving for longer-term goals, like retirement or a child's education. There's more risk but there's also potential for greater returns.
What plans and products can help you save for your dream purchase?
|TFSA||GIC||Market Linked GIC
|What is it?||A Tax-Free Savings Account (TFSA) is a registered plan where investment income and gains within the plan are 100% tax-free.
||A Guaranteed Investment Certificate (GIC) is a low risk, secure investment option that offers interest on your principal investment.
||Market Linked GIC, such as the Scotia Equity-Powered Guaranteed Investment Certificate (EPGIC), is a GIC whose principal is guaranteed and total return is linked to the stock market.
||Mutual Funds, such as ScotiaFunds®, are professionally managed investment vehicles that offer a convenient and affordable way for investors to access investment opportunities domestically and around the world.
|How does it work?||You can contribute up to $5,500 annually into your TFSA and any unused contribution room carries forward.
||You invest a set amount of principal and earn interest at either a fixed or variable rate over a period of time.
||You invest a set amount of principal, like a traditional GIC, with the potential for additional return from equity investments based on how the stock market performs.
||The investment focus of a mutual fund can be very narrow (a specific sector or country focus) or quite broad (diversified across the major asset classes).
|Who is it for?||Anyone looking for tax-free savings.
||Anyone looking for principal security and guaranteed returns.
||Anyone looking for 100% principal guaranteed investment and is willing to forgo the guaranteed return of a traditional GIC in exchange for the potential to earn a higher return.
||Investors seeking a convenient way to access the growth and/or income potential of financial markets.
|Portfolio Solutions||High Interest Savings Account||Personal Line of Credit||Plan Personal Loan|
|What is it?||Portfolio Solutions combine a diversified mix of mutual funds for a variety of risk tolerances in the convenience of a single investment.
||High interest savings accounts, such as the Savings Accelerator or MomentumPLUS Savings accounts, are savings accounts that help you grow your savings even faster with higher interest rates than a regular savings account.
||A personal line of credit, such as the Scotia Line® Personal Line of Credit, is a flexible credit line that combines access through a card with higher credit limits at very competitive rates.
||A personal loan, such as the Scotia Plan® Personal Loan, is a customized loan that lets you borrow what you need with flexible repayment terms.
|How does it work?||Portfolio Solutions may be diversified across different asset classes (e.g. stocks and bonds), geography, economic sector and/or company size in an effort to take advantage of market opportunities and manage risk.
||You can earn higher interest on your savings with no monthly fee.
||You can use your cheques, access card or get instant cash advances from Scotiabank ABMs to access your line of credit for balance transfers or large purchases, such as a car, trip or major home appliances.
||Loans are available from $1,000. It allows you to set a payment schedule that fits your needs (weekly, bi-weekly, semi-monthly, or monthly) to help you stay on track and pay down the loan, but with flexibility should your circumstances change.
|Who is it for?||Portfolio Solutions can be a convenient way to help you achieve your financial goals – whether your goal is to generate regular income or to maximize the growth potential of your nest egg over the long term.
||Anyone who is looking to build their savings through earning interest on their principal and not have their money locked into a specific term.
||Anyone who wants access to their money wherever and whenever they need it, at competitive interest rates.
||Anyone who wants to borrow only what they need, at fixed or variable rates. Ideal for anyone who is looking for a one-time lump sum amount of credit with peace of mind of knowing that their loan will be paid off within a specified time frame.
Tips & hints:
Let us help you achieve your saving for a big purchase goal faster.
Your spending habits
One way to afford that new purchase a little faster is looking at how you're spending every day. Take a look at our Money Finder Calculator to see where you can be saving more.
Earn cash back on everyday purchases
With some money back accounts and credit cards, you can earn up to 4% cash back on every purchase you make with them. It's an easy way to turn everyday spending into putting just a little bit extra toward that big purchase.
Pre-Authorized Contributions (PACs) can help build your savings easily and conveniently through automatic contributions. Set it up once and start saving. It's makes savings simple and hassle-free.
Bank the Rest
With Bank the Rest™, each purchase you make gets rounded up, to the next $1.00 or $5.00, and the difference goes right into your savings or investment account. So, your savings grow with each purchase.