In this chapter you learned that saving is an important

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In this chapter, you learned that saving is an important part of personal financial planning and
that without savings you cannot make investments. One way to invest your savings is to open a
tax-free savings account (TFSA) and make a contribution. Let's assume that you have $5,000 to
invest and are considering a high-interest savings account or a guaranteed investment
certificate (GIC) to be placed in your TFSA.Instructions(a) Go to the website of your Canadian
financial institution and find the current rates of return that each investment-a savings account
or a GIC-is providing.(b) If you invested the $5,000 in a savings account or a GIC, how much
would each of these alternatives be worth after two years if the current rate of return continued?
Assume that the contribution is made through monthly payments of $416.67.(c) Assume that
you continue to invest $5,000 every year for 40 years. What rate of return would you require to
reach $1 million? How does this compare with the rate of return provided in a savings account
or a GIC?View Solution:
In this chapter you learned that saving is an important

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