Saturday, October 17, 2009

Double Interest at ING

I know it’s barely winter. However, in my job we usually look about 2 or 3 months ahead. This means already we are into Christmas and New Year’s. I guess we are not the only ones. At ING direct they are already trying to get savers on the their TFSA contributions for the coming year. The offer? Start a ‘2010 TFSA kick start account’ and they will offset the taxes you will pay on the interest between now and January by doubling your interest. Come January this account will automatically be converted into a TFSA account.

Given that interest rate is 1.05% what’s the big deal? But for people like me I started saving for my $5000 in January of this year. So do I want this $5000 to sit in my regular savings to earn 1.05% or in this account to get 2.1%? All else being the same, I’d rather get the extra interest.

Come January, if I really want a different type of investment I can always transfer. Although, I’m pretty sure I’m keeping it in a high interest account. I believe in keeping interest yielding investments in tax free or registered accounts, and other more tax efficient investments in regular accounts. Also, I use my TFSA as an emergency fund. It earn interest tax free, I can get to it easily when I need to and top it up again when I can.

If you are new to ING please consider using my referral code (14795960S1), also on side bar. If you open an account with $100 deposit, both of us get $25.


Canadian Saver said...

I read a great book about TFSAs and the difference between these and RRSPs: Tax-Free Savings Accounts by Gordon Pape. I have opened my Kick-Start account and hope to have it funded as early on into 2010 as possible since he shows the difference between funding in January vs December can make a big difference over 20-30 years.