Goals

I preach goals.

I arrest discussions of programming with the question “If you can’t define the problem, what are you doing writing a solution in VBA?”

As a consultant, my first question to any prospect was “What is your goal?”, because if you don’t have a goal, I can’t help you to reach your goal, and if I can’t show you that we have reached your goal, you will be unhappy, and if you are unhappy you won’t pay me, and if you don’t pay me I’ll starve to death.

Today I met a perfect situation where a goal is vital.

I currently put my savings into Motus, a bank which offered 3.25% interest a couple of years ago but which has now dropped to 1.25%

A search of the web has turned up Motive and Simplii, which both offer around 4.5% interest,

Motive offers 4.75% for the first 120 days; Simplii offers 4.60% for 180 days. But Simplii also has a $300 cash gift if I deposit $100 per month for three consecutive months by direct deposit.

Simplii has a lower interest rate but runs for an extra sixty days.

Would you go with Motive, or with Simplii?

Just to confuse you as much as I was confused, that $300 gift is if you open a Chequing account (presumably with zero interest), and it’s not clear to me if I can get the $300 gift with the chequing account AND the 4.6% if you open a savings account too.

OK. If you fire up your spreadsheet processor at this point you will be bogged down within five minutes, I promise you, and you will still be bogged down two hours later, even if your bottled jam is ready to be taken out of the sterilizer.

The Motive offer ends February 14, 2025 whereas the Simplii offer is valid until April 30, 2025. That’s the chequing account; their savings offer is valid until February 28th.

How are you getting on with your spreadsheet now?

Hah hah.

Stretch your legs, remove the jars of jam, and then answer this question: “What is your goal?”

(a) To obtain the best interest rate

or

(b) To increase your net worth ASAP

Without a goal you are tugged back and forth between the $300 cash gift and the longer term at that initial interest rate.

The introductory rate is basically the long-term rate augmented by 2%

So you see now you need to know what the rate will be after the first 120 or 180 days.

Your spreadsheet just grew more complicated. The 3 x $100 you must deposit in the Simplii chequing account is not available for the roughly 4.5% interest.

On top of that you know that a slightly lower rate can sometimes overtake a slightly higher rate over the long term. (Marathon vs. Sprints)

There’s more., but by now you will have an awfully messy spreadsheet because you didn’t have a goal (a.k.a. a well-defined Problem) and you are trying to engineer a solution to a problem that you don’t yet have.

A Goal will serve you well.

If you just want to park your money and watch it grow, think savings rate and period and forget the $300 cash.

If you could use an injection of $300 cash before you switch to a goal of high interest, then definitely go for the chequing account.

If you invest $7,000 at 4.5% it will have grown by $79 after three months, nowhere near $300.

And whether or not you divert $300 into a chequing account, you will ultimately put all your spare cash into a savings account.

Does your spreadsheet at this stage make you feel that you know which way to go?

Without a goal you cannot know if you are heading in the right direction.

Besides which, the interest rate drops back to “normal” after 120 or 180 days anyway.

And then it drops again, and again, and twelve months from now you will be searching for a better offer from some other online bank …

Best of luck (hah hah!)

P.S. I assume you know how to jump the hoops to cancel a direct deposit order to a participating bank; remember: they don’t want you to cancel the order.

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