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Don't chase the rates

"It’s a proven fact that if you stagger your money in one- to five-year GICs (Guaranteed Investment Certificates), you will earn more money than chasing short term rates."

With 16 years’ experience in the banking sector (with 12 years in-branch), Pat Neitsch, Motive Financial’s Assistant Manager, knows a thing or two about saving money. Her favourite thing about working at Motive Financial? “The opportunity to serve clients across the country, and to talk to people and learn about what’s happening in various regions,” says Pat.

The online bank’s small but savvy group of financial experts are a big reason why clients choose Motive Financial. Through their personalized, one-on-one service, it’s easier for them to build trusting and lasting relationships with their clients. According to Pat, “You can call and ask for a specific person and more often than not, get that same person over and over again.” The stronger the bond of trust, the more financially beneficial that relationship becomes with your bank meeting your unique financial needs.
Many of Motive Financial’s customers and followers also aren’t aware that the team is based in Edmonton, which gives them firsthand insight into not only the economic realities facing Albertans but also Canadians overall.

When asked what top saving pitfalls she has seen over the course of her career, Pat says a big one is that most people spend — and oftentimes waste — their time chasing rates. “It’s a proven fact that if you stagger your money in one- to five-year GICs (Guaranteed Investment Certificates), you will earn more money than chasing short term rates.” She notes that promotional rates, for example, end up costing a lot of time and energy to hunt down. Pat suggests a slow and steady approach instead. “Don’t chase after what looks like the highest or best deal; find moderation and keep it steady,” says Pat. “Put money away and leave it alone.”

By staggering your money in GICs, you can eliminate the guess work that comes from choosing interest rates. For example, if you have $10,000 to invest in a GIC, you could put all $10,000 away for five years. Or you could stagger them — $2,000 for one year, $2,000 for two years, $2,000 for three years and so on. The benefit is you don’t have to guess which term will give you the best interest rate. Since you’ll have money invested in each, you can then take advantage of upward swings in interest rates. Likewise, if the interest rate is moving downward, only some of your money is exposed to the risk of lower rates.

Misuse of products like the TFSA (Tax Free Savings Account) is another common issue. From Pat’s experience, many view the TFSA as transactional, like a debit account. “If you keep taking your money out, you aren’t getting the interest, so you aren’t really saving the tax either,” she cautions. “Saving takes time.”

Her final piece of advice is reminiscent of what you heard back in school but still important: Do your homework. Pat reminds us,“Banks are offering the same products, however, everyone is at different phases in their life requiring different products.” Find the option most suitable for you by doing your background research and understanding your options.

Motive Financial is an Edmonton-based online personal bank, founded in 2008 under its previous moniker of Canadian Direct Financial. Pat highlights their aim of making saving money easier for you by understanding your personal financial needs while providing better rates and easy to use products – all accessible online or by phone.