Hi everyone! Liam here. Today we are talking about how to make your money work as hard as you do! Most people know they should save money, but do you know the difference between saving and investing? This is one of the most important comparisons you will ever make.I am Maya! I love looking at how small choices today turn into big results tomorrow. Saving is putting money aside for your short term needs, like an emergency fund or a trip. Investing is buying things like stocks or mutual funds with the goal of growing your wealth over the long term. Today, we are going to look at the benefits of each and how to use Canadian tools like T F S A s and R R S P s to reach your goals.Hi! I am Chloe. Let us start with the savings options available to you through your bank or credit union. You have probably heard of a basic savings account. These are safe and your money is easy to get, but the interest rates are usually quite low. If you want a better return, you should look for a High-Interest Savings Account, or H I S A. These often offer much better rates, helping your money grow faster while still keeping it safe. Then, we have the heavy hitters: the registered accounts. A Tax-Free Savings Account, or T F S A, is available to Canadians eighteen and older. Any interest or investment income you earn inside a T F S A is completely tax-free, even when you take the money out! This makes it one of the most flexible and powerful tools for young people. Have you thought about what you are saving for? A car? School? A T F S A could be your best friend for those goals.And I am Noah. While saving is about safety, investing is about growth. When you invest, you are taking a bit more risk in exchange for the chance to earn a lot more money. Think of it like a ladder. At the bottom, you have safe things like G I Cs, or Guaranteed Investment Certificates. These are very safe but grow slowly. In the middle, you have Mutual Funds and E T Fs, which are collections of different stocks and bonds. At the top, you have individual stocks, which can go up and down very quickly. The benefit of investing is that over a long period, like ten or twenty years, it almost always beats the interest rate of a savings account. For example, a savings account might give you two percent interest, but a diversified investment portfolio might average seven percent over time. That five percent difference might not look like much now, but over thirty years, it could be the difference between having fifty thousand dollars and having two hundred thousand dollars!Noah mentioned the long term, and that brings us to the Registered Retirement Savings Plan, or R R S P. This account is designed specifically for your life after you stop working. The big benefit of an R R S P is that the money you put in reduces your taxable income for that year. So, if you earn fifty thousand dollars and put five thousand into an R R S P, the government only taxes you as if you earned forty-five thousand. This can lead to a big tax refund! The money then grows tax-deferred until you take it out in retirement. While retirement feels a long way away, the magic of compound interest means that starting at age eighteen with just a small amount is much better than starting at age forty with a large amount. Time is an investors greatest asset. Are you ready to let time do the work for you?We also need to explore the planning tools available through financial institutions. Most banks now have automated savings tools. You can set up a “Pay Yourself First” system where a certain amount of money, say twenty dollars, is moved from your chequing account to your savings or investment account every time you get paid. This is a game changer because if you do not see the money, you will not spend it! There are also robo-advisors and online portals that can help you choose an investment plan based on your risk tolerance. Do you prefer a “Safe and Steady” approach, or are you comfortable with a “Growth and Risk” style? These tools ask you a few questions and then build a portfolio that matches your personality. It has never been easier for a student to start investing in their future.Let us look at a real-world example. Imagine you have two thousand dollars. If you put it in a standard savings account at one percent interest, after ten years you would have about two thousand two hundred and ten dollars. You only made two hundred and ten dollars in a decade. But if you invested that same two thousand dollars in a balanced fund earning six percent, after ten years you would have nearly three thousand six hundred dollars! You earned over one thousand five hundred dollars more just by choosing a different option. This is why comparing the benefits of saving versus investing is so vital. Saving is great for your “Right Now” money, like your emergency fund. Investing is for your “Future You” money. Balancing both is the secret to financial success. How would you split your two thousand dollars? Fifty-fifty? Or would you keep it all safe?So, to recap: Saving is about safety and short term goals. Use high-interest accounts and T F S A s for this. Investing is about growth and long term wealth. Use R R S P s and diversified funds to outpace inflation. Always use the automated tools provided by your bank to make saving a habit. And most importantly, start today! Even a tiny amount compounded over forty years becomes a mountain of money. You have the knowledge and the tools to grow your wealth. The only thing left to do is take that first step. What are you waiting for? Let us get those money trees growing!We have covered the basics of how to grow your wealth and the different accounts you can use in Canada. In our next video, we are going to look at the other side of the coin: borrowing. We will see how to handle student loans and credit cards without getting trapped in debt. But for now, take a look at your own savings. Do you have a goal? Do you have an account that helps you reach it? Making a plan for your savings is like giving your future self a high five. Keep analyzing, keep growing, and keep dreaming big. You are doing an amazing job learning these skills. We will see you in the next lesson!
