Timeline to $100,000 on a $60,000 income using a 3.5% HISA
| Years | Saving 10% ($500 a month) | Saving 15% ($750 a month) | Saving 20% ($1,000 a month) |
| 1 | $6,517 ($17 interest) | $9,776 ($26 interest) | $13,035 ($35 interest) |
| 2 | $12,746 ($246 interest) | $19,118 ($368 interest) | $25,491 ($491 interest) |
| 3 | $19,192 ($692 interest) | $28,788 ($1,038 interest) | $38,383 ($1,383 interest) |
| 4 | $25,863 ($1,363 interest) | $38,795 ($2,045 interest) | $51,727 ($2,727 interest) |
| 5 | $32,729 ($2,269 interest) | $49,153 ($3,403 interest) | $65,537 ($4,537 interest) |
| 10 | $71,094 ($10,594 interest) | $106,640 ($15,890 interest) | $142,187 ($21,187 interest) |
| 15 | $116,612 ($26,112 interest) | $174,918 ($39,168 interest) | $233,224 ($52,224 interest) |
| 20 | $170,673 ($50,173 interest) | $256,009 ($75,259 interest) | $341,346 ($100,346 interest) |
| 50 | $788,780 ($488,280 interest) | $1,183,170 ($732,420 interest) | $1,274,082 ($733,082 interest) |
Naturally, the more you can save from your total income, the more compound interest will help accelerate your progress towards your first $100,000. Referring to the table, the $60,000 earner saving the recommended minimum of 10% will save $100,000 by year 14, whereas a more aggressive approach of saving 15% ($750 a month versus $500) will get you there in nine years.
The best way to invest $100,000 in Canada
How should you invest your first $100,000? It depends on your goals, how much and how often you contribute to the investment account, and your timeline.
If your goal is to buy a house or condo, the first home savings account (FHSA) is the best account to hold these savings, says Sather. “It gives you the best of all worlds, but you’re restricted to $8,000 a year to a maximum of $40,000. So, that only gets you to $40,000, not $100,000.” In this case, he advises supplementing that with a tax-free savings account (TFSA) or registered retirement savings plan (RRSP).
“A TFSA is a no-brainer because you put the money in, and it’s flexible; you can take it out,” says Sather. He adds that RRSPs are helpful for medium- to long-term goals like retirement, education or a home. In the case of education or a home, you can borrow money from your RRSP for these goals (through the Lifelong Learning Plan and Home Buyers’ Plan, respectively). But you’ll have to pay that money back over a period of time—or include it as income on your tax return.
If the goal is owning real estate, having both an FHSA and a TFSA is the way to go, he says. For a car, Sather recommends a TFSA. But for retirement planning, look to RRSPs and TFSAs, as well as investing with a non-registered (taxable) account, which has no contribution limits. “The TFSA makes sense as you pay no tax on the gains and interest earned, and you get your withdrawn contribution room back the following year after withdrawal,” says Sather. (Not sure which account you need? Read this comparison of the TFSA versus RRSP.)
Sather underscores the importance of seeking out the top interest rates from online banking institutions in addition to your brick-and-mortar banks that often deliver a superior return. Take, for instance, these top five high-interest savings accounts of 2024, with interest rates ranging from 3% to 5%.
Working with a financial advisor is another tip that may get you a better return. “The interest rates the banks offer advisors to give to clients almost double, if not triple, what clients are getting from the bank on their own,” says Sather. “The banks offer 4.65% to advisors on their high-interest savings accounts versus 2% or less for those at the branch.”
