Upsize Your Savings (without really trying)

In the January issue, we asked readers which area of their life needed a little more pizzazz. Many of you (52%) responded that your savings could use a boost.

Maybe you’re saving for a short-term goal, like next year’s family vacation, a flat-screen TV, a new car or a down payment on your first home. Or perhaps your savings goals are more long-term, like a comfortable retirement. Whatever it is you want, by refining your savings strategy you can make your money work harder.

Saving for Short-term Desires

With so many competing interests laying claim to each paycheque, there’s often nothing left over for you. Without a savings strategy, it’s too easy to miss out on the things you really want to do with your money.

Solution: Give your goals the priority they deserve, by paying yourself first.

• Figure out what you really want. Decide on a few important items or events to save for, with an anticipated time frame for each.
• Automate your savings. Set up an automatic savings plan to divert funds — even a very small amount — into a separate savings account each payday. You’ll soon find you don’t even miss the money.
• Aim high. Choose the best account for short-term accumulation: a high interest savings account that calculates interest daily, pays interest on every dollar, has no monthly fee and no minimum balance is a good choice. You’ll get all of your money working for you, while keeping it instantly accessible.

Here’s how it can work, if you are starting with a $0 balance:

*Assumes deposits made at the end of each period.
** Based on RBC Day-to-Day Savings Account with minimum balance of $5,000.
***The 3% interest is calculated daily on the closing credit balance and paid monthly. Chart is for illustrative purposes only.

Put it into motion: Get started with your short-term savings goals today, with the RBC High Interest eSavings^® account. You’ll earn high daily interest of 3% on every dollar, with no minimum balance^*. You can set up automatic deposits through RBC Royal Bank^® Online Banking in less than a minute. Open an account now.

^*For up-to-date interest rates on this and other accounts, please visit www.rbcroyalbank.com/rates/persacct.

Long-term Saving for the Lifestyle you Want

You know that saving for retirement is important, but you always seem to wind up scraping your contribution together at the last minute.

Solution: Make a small contribution every month and let the momentum of regular savings and compound interest do the work for you.

• Get a head start. If you get an income tax refund this year, deposit it immediately into your RRSP account. It will start earning compound interest and you’ll get a tax deduction for 2008.
• Make it automatic. Set up an automatic savings plan for any amount you can afford — as little as $25 a month gets the ball rolling.
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• Catch the drops in the bucket. Whenever you have a little cash — a $100 bonus from work, $50 from a garage sale, a $25 purchase rebate — plough it into your RRSP, rather than waiting until you have “enough” to make a “proper” contribution.
• Up the ante. As soon as you can, bump up the contribution amount. For example, if you get a 3% raise, increase your regular RRSP contribution by 3% as well. Or, if you can’t deposit more, try contributing small amounts more often — you’ll be surprised what a difference it can make over the long term.

Here’s how it works, with an RSP-Matic^® account earning 5% compounded annually:

*Assumes deposits made at the end of each period.
Chart is for illustrative purposes only.

Put it into motion: Start saving today with an RSP-Matic^® account. The sooner you begin, the longer your contributions will have to benefit from tax-deferred compounding. Open your RSP-Matic account by calling an RBC advisor at 1-800 ROYAL^®1-1, or visit your local branch.