Just like paying off debt is part of everyone’s financial life, so is saving large sums of money. Whether it’s for a house down payment, to purchase a car, or an emergency fund in case the worst happens, at some point your bank account will (hopefully) be home to a large sum of money.

I have had to save large sums of money precisely three times in my financial life. The first significant sum was my emergency fund. That $10,000 was my top priority after I finished paying off my student loan debt. At the time it seemed like a huge amount of money to save, but I managed to scrape it together in about six months.

The second big sum was my home down payment. I had originally planned to save between $35,000 – $40,000 – again, a massive amount of money – over three years. It turned out that saving around $30,000 in 16 months was sufficient to put 10% down on my first home in 2016.

And today, I’m on a mission to save a third significant sum. I want to pay for my husband’s second degree in cash. This sum is a little more challenging for a few reasons:

• I’m doing it as the sole breadwinner in the house while my husband is enrolled in university
• Instead of having a final big goal in mind, I need to ensure money is available to be paid out in installments over the next 16 months
• I don’t have a super firm dollar goal in mind

My husband is using the Lifelong Learning Plan to fund his tuition, and I’m saving money to cover our living expenses in the meantime, repay the LLP as soon as he graduates, and catch up on the RRSP contributions we’re not going to make while he is in school.

In the long run, that means we’ll need to end his second degree program with about $35,000 in the bank. There will be a lot of money flowing into and out of that account in the meantime, but I’m doing my best to forecast using a savings planning spreadsheet. We’ve nicknamed this account the Big Pile of Money, or BPM.

The BPM currently sits at $19,546, so I’ve got a long way to go before meeting my savings goal.

4 Places to Keep Your Big Pile of Money

If you’ve got a similar savings goal, the planning and execution of your savings strategy is essential, but so is where you keep that money. Choosing the right account will help you reach your savings goal sooner and ensure your money is available when you need it.

Chequing Accounts

Best For: Money you need within five days. Small balances.

The ultimate in liquidity, a chequing account is a good place for money you are planning to spend in the next five days. Chequing accounts are widely available at almost every bank in Canada, but there are fee-free options available (my personal go-to is Tangerine, you can sign up with my orange key to receive a bonus $50: 38939199S1).

The interest rate offered on chequing accounts is abysmal. The current interest rate on my Tangerine chequing account is 0.15%. This makings a chequing account the worst place to put your BPM. Some banks require you to keep a large sum in your chequing account to waive the monthly fee. Don’t fall for this. Switch to Tangerine or Simplii Financial (formerly President’s Choice Financial), enjoy fee-free banking and move your money somewhere that it will earn interest.

High-Interest Savings Accounts

Best For: Money you’ll need in less than a year. Uncertain investment horizons. Emergency funds.

Not all savings accounts were created equal. Some savings accounts offer interest rates that are only marginally better than the 0.15% you’ll earn on a Tangerine chequing account. When deciding on a savings account, it’s important to choose one that pays enough interest to at least keep up with inflation, so that your money doesn’t lose value over time.

High-interest savings accounts are perfect for money that you may need to access in less than a year. The money will be there when you need it, and it’s earning some interest before then. High-interest savings accounts are perfect for emergency funds, travel funds, and saving for Christmas. I’m keeping my BPM in a high-interest savings account.

My current favourite for a high-interest savings account is EQ Bank. They’re currently paying 2.30% on all deposits with no promotional expiration date. This is the best rate around and I’ve had only good experiences with the EQ Bank website and team. I transfer money directly from my Tangerine chequing account, and it arrives in my EQ Bank account within three to five business days. If I buy something on my credit card that I need to pay off with the BPM, it can do that right from the EQ Bank website.

Guaranteed Investment Certificates

Best For: Savings goals with a 1-5 year time horizon. Long-term house down payments, children’s education funds, big vacation funds.

Guaranteed Investment Certificates (GICs) are an excellent tool for savings goals with a medium to long time horizon. GICs work by guaranteeing a higher interest rate in exchange for locking in your money for a term, usually between 30 days and five years. The longer the term, the higher the interest rate.

GICs haven’t been in the spotlight much because the interest rates weren’t stellar, but EQ Bank has changed that by offering decent rates on GICs recently. For example, their 1-year GIC rate is 2.76%, and their 3-year GIC rate is 3.25%.

The big downside to a GIC is that your money is locked in for the duration of the term. Some GICs will not let you redeem your cash early, and some will, but you won’t earn the advertised interest rates. You should be sure you won’t need the money before you purchase a GIC, which is what makes this financial tool best for medium time horizons like long-term house down payment savings, or that dream vacation you’re going to take in a few years.

Investments

Best For: Investment horizons longer than five years. Retirement, young children’s education.

When I say investments, I mean buying stocks and bonds either individually, through exchange traded funds (ETFs), or by using a robo advisor or mutual funds. Investing your money is the ultimate way to make compound interest work for you because the returns are generally almost double the best five-year GIC. The downside of investing your money is that your returns are not guaranteed. Investing comes with a certain amount of risk, and you want to make sure your money has time to recover its value if the market takes a dip. The worst thing would be to go to withdraw your house down payment only to find you have 20% less than you’d expected because of a market correction.

For now, I’m keeping my BPM in a high-interest savings account at EQ Bank. The interest I’ll earn on that account will help boost my account balance, but the money is readily accessible so I add to it as my freelance money comes in, pay tuition, buy clothes, and cover any unexpected costs that come up.

Where do you keep your big pile(s) of money? I want to know!