For many people, high school is a long time ago and math was never their favourite subject. Here’s a quick refresher to show how much money you will earn on money in a bank account, in a GIC or from dividends if you know the annual rate.

## Rates Bank Advertise for Bank Accounts and GICs

If you go to a bank website, like at Tangerine.ca, you can see a list of the rates they pay for GICs and bank accounts. It is listed as a percentage, like 1.4%. The rate is how much money they pay for a year. Even though it may be a daily interest account, you won’t earn the advertised percentage unless you money stays in the investment for 365 days. This article will tell you how much money you would earn at that advertised rate on your savings.

## Yields (Rates) for Shares or Stock in a Company

If you buy a share of a company in the stock market, it may pay a dividend. That’s a cash payment that may be paid once a month, once every three months, or once a year. No matter which way they pay, they usually quote how much the dividend is per year as a percentage.

For example if you buy shares in Bell right now the dividend is about 5%. This article will also tell you how much money you would earn with a dividend of 5% based on the number of dollars of shares that you bought. For example, if you bought $2500 worth of shares, you would look below to see how much money the dividend is in the “you will get paid” column for $2500 at the percentage rate quoted for your dividend.

The maximum you can put into your TFSA for 2014 and beyond is $5500 a year, which is why I’ve included that amount in the tables below.

## How Much You Will Earn per Year at 5% Annually on Your Bank Account, GIC or Dividend Stock

If the rate is 5% per year and

you invest | you will get paid |

$100 | $5 |

$500 | $25 |

$1000 | $50 |

$2500 | $125 |

$5000 | $250 |

$5500 | $275 |

If it’s a daily interest bank account you will actually get slightly more because you will get paid interest on the interest as well.

## How Much You Will Earn per Year at 4% Annually on Your Bank Account, GIC or Dividend Stock

If the rate is 4% per year and

you invest | you will get paid |

$100 | $4 |

$500 | $20 |

$1000 | $40 |

$2500 | $100 |

$5000 | $200 |

$5500 | $220 |

If it’s a daily interest bank account you will actually get slightly more because you will get paid interest on the interest as well.

## How Much You Will Earn per Year at 3% Annually on Your Bank Account, GIC or Dividend Stock

If the rate is 3% per year and

you invest | you will get paid |

$100 | $3 |

$500 | $15 |

$1000 | $30 |

$2500 | $75 |

$5000 | $150 |

$5500 | $165 |

If it’s a daily interest bank account you will actually get slightly more because you will get paid interest on the interest as well.

## How Much You Will Earn per Year at 2% Annually on Your Bank Account, GIC or Dividend Stock

If the rate is 2% per year and

you invest | you will get paid |

$100 | $2 |

$500 | $10 |

$1000 | $20 |

$2500 | $50 |

$5000 | $100 |

$5500 | $110 |

## How Much You Will Earn per Year at 1% Annually on Your Bank Account, GIC or Dividend Stock

If the rate is 1% per year and

you invest | you will get paid |

$100 | $1 |

$500 | $5 |

$1000 | $10 |

$2500 | $25 |

$5000 | $50 |

$5500 | $55 |

## How Much You Will Earn per Year at 0.25% Annually on Your Bank Account, GIC or Dividend

Some bank accounts have really low interest rates. I know some actually pay only 0.25% a year.

If the rate is 0.25% per year and

you invest | you will get paid |

$100 | $0.25 |

$500 | $1.25 |

$1000 | $2.50 |

$2500 | $6.25 |

$5000 | $12.50 |

$5500 | $13.75 |

## How to Calculate How Much Money You Will Earn in One Year for any Rate and any Investment

You can calculate how much money you will earn in one year using a calculator and the following math:

- Type in the interest rate or the dividend yield. For example, for a rate of 3.25% type in: 3.25
- Press the divide ÷ or / key.
- Type in 100.
- Press the Enter or = key.
- Press the times * or x key.
- Type in the amount you have invested. For example, type in: 5500
- Press the Enter or = key.

For this example you would type:

3.25 / 100 = x 5500 =

and get

178.75

which means $178.75 is the amount you get for investing $5500 at 3.25% for one year.

You can see why it’s a good idea to save a lot for retirement!

**Related Reading**

**Pros and Cons of Buying GICs in a Self-Directed Online Brokerage Account****Getting the Best Rate for GICs from a Bank an Exercise in Anger Management to Optimize Earnings**

**Join In**

Have you ever thought you were getting $80 a year and then found out it was $8? With interest rates so low, it can be a real shock!

Yes, we bank with Tangerine.ca among other places. If you open your first account ever with Tangerine (or ING Direct) using our Orange Key below, and deposit $100 before January 31, 2017, you and we will both get a cash bonus of $50 each. (Yes, they did extend the promotion for another few months!) All you have to do is enter the Orange Key **46470587S1** when you are opening your Account, and you’re set to go.

Just copy our Orange Key, then click on this Tangerine link to see the details and apply for an account. (Note: it only applies to people with no existing or previous accounts with Tangerine or ING Direct.)

Hi Bet,

This article is useful for those of us who are mathematically challenged. Percentages have always given me grief. Where I get confused is when you don’t leave your funds in the account for the year. Could you also add an example of what you would earn on an “annual” rate of 2.4% which is valid for only six months (e.g., Tangerine’s latest offer). It reverts back to 0.6% after the six months are up, so I can’t figure out the formula for that. Would you divide the total by 365 days, then multiply by 182.5 for the 6 months? Please help, and keep up the great blog!

Bonbon D.

P.S. – Is there some reason your articles are not dated? Including dates written would help identify how current the info is, because as you say changes are constant.

While not completely to the cent accurate, yes, you will get a close approximation of the the amount Tangerine is paying if you divide by the 365/366 days and times back up for the six months. Because they pay interest monthly, you should get a tiny bit more, because you will be earning some interest on the interest.

Tangerine applies the rate to the lowest daily balance each day, so if the amount you have in the account changes that will also change the result. I think the 2.4% applies to any funds put into the new account during the first six months, so if your balance increases as you make new deposits, the interest earned will also increase.

I had problems with dates and website especially since I try to update certain articles when I have time so I gave up on using dates for the entire article and try to put in references inside an article if it’s important (like “as of now, June 24, 2016). Sorry for any confusion!