Financial institutions offer various savings alternatives. Complete this online discussion with the goal of developing a deeper understanding of the different types of cash management alternatives.

Directions

Answer the questions for the mini-case on Savings Alternatives. In your groups, comment and discuss the answers provided by other group members, as needed.

Min Case - Savings Alternatives

Sandra Chan, 22, has just moved to Winnipeg to begin her first professional job. She is concerned about her finances and, specifically, wants to save for a "rainy day" and a new car purchase in two years. In order to finance her move, Sandra had put aside some money. Now that her move is finished, Sandra has $1000 remaining in her chequing account at the bank. Sandra is unsure if she should put this money aside in a "rainy day" fund, or if she should put this money aside for a new car purchase. Sandra has reduced her savings options to four choices:

a. Leave the $1000 in her chequing account where it will earn 0.25 percent per year.

b. Deposit her $1000 in an online investment savings account where she will earn 1.35 percent per year.

c. Invest her $1000 in a Canada Premium Bond that pays interest of 1.00 percent per year.

d. Invest her $1000 in a 2-year GIC that pays interest of 1.50 percent per year.

1. Which short-term investment is most appropriate for Sandra's situation?

2. Assuming Sandra remains unsure as to what she will do with the $1000, does it really matter if Sandra puts her $1000 in a "rainy day" fund or a "car purchase" fund?

For added convenience, I have reproduced the case below:

Sandra Chan, 22, has just moved to Winnipeg to begin her first professional job. She is concerned about her finances and, specifically, wants to save for a 'rainy day' and a new car purchase in 2 years. In order to finance her move, Sandra had put aside some money. Now that her move is finished, Sandra has $1000 remaining in her chequing account at the bank. Sandra is unsure if she should put this money aside in a -rainy day' fund, of if she should put this money aside for a new car purchase. Sandra has reduced her savings options to four choices:

1. Leave the $1000 in her chequing account where it will earn 0.25% per year.

2. Deposit her $1000 in an online investment savings account where she will earn 1.35% per year.

3. Invest her $1000 in a Canada Premium Bond that pays interest of 1.00% per year.

4. Invest her $1000 in a Guaranteed Investment Certificate (GIC) that pays interest of 1.50% per year.

1. Which short-term investment is most appropriate for Sandra's situation?

2. Assuming Sandra remains unsure as to what she will do with the $1000, does it really matter if Sandra puts her $1000 in a 'rainy day" fund or a 'car purchase fund?

Attachment:- Assignment File.rar