Money at Bank vs. Money Invested

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u/FinEducation · Joined Oct 2024

Why invest? 1) Achieve better long-term returns. 2) Enjoy low taxes on capital gains. Inflation can erode your savings, making investing the smarter choice!

Last update Nov 2024
  • Scenario 1: Money Invested in Market
  • Scenario 2: Money in Savings Account
  • Scenario 3: Money in Chequing Account

This chart shows how your $1,000 grows over time. Experiment with different rates, and check 'How is Cash Value Calculated?' below to grasp the tax implications included in this calculation.

# Years from Now

Try your numbers:

Banks constantly advertise "promotional rate", only if you're willing to jump the hoops and switch a bank every half a year. Otherwise, look at their rate after the promotional period - usually somewhere among the fine texts after asterisks

A =

This is how much you'll have to pay CRA (and Revenu Quebec if you're Quebecker) for every other dollar you make, on top of your current income. Google a "tax calculator" to find out.

B =
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Time Value Assumptions

Heads Up!

If you're using Cost Basis (cb) for calculating capital gains:

Please be aware that very few countries currently use inflation-indexed cost basis. Double-check your local tax rules before publishing.

Scroll up to view updated chart.

Not exactly what you want?

How is Cash Value calculated?

When selling an investment (bond, ETF, or anything in between), you'll only pay HALF of income tax on capital gains, and you can definitely avoid a large one, by, for example, selling XGRO and buying VGRO along the way (Google these two).

Decisions / Expectations

(Expressions are evaluated at Year 0 only.)

C̃ =

Calculations

(Expressions are evaluated at every year.)

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    Buy an asset growing at its own rate.
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