A word on savings…

(This was originally published in the November 2016 version of The Dividend Growth Newsletter. It is available here.)

Canada’s Inflation Rate was 1% in January of ’15 and rose as high as 2% in January of ’16. In September, it was 1.3% and will likely rise a bit more towards the end of the year.

If your money was in a Savings account earning 0.80% or less, you’re actually not saving.

If your money was in a High Interest Savings Account earning 1.5% and you are paying income tax on the interest, you are still not actually saving.

If your money is “laddered” in five GICs with ⅕ coming due each year over the next 5 years, and your average interest rate is 1.80% and your marginal tax rate is 27.5% or less, you are breaking even.

If your money was invested in the WORST performing dividend mutual fund over the past 5 years and earned an average of 1.32% per year, and your only income was $50,000 in eligible dividends, you paid no income tax and broke even against inflation.

Could you imagine how much money you could SAVE if your portfolio performed better than the average dividend mutual fund?