“Sound” Investment: Figuring Out How Much You Invested Before — By Solely Looking at the Current Interest Amount
Need a dose of no-BS financial education? Here’s a good news for you. Not too long ago, we were chatting with our wildly imaginative friend and tutee Victor, who came up with the following investment question:
OK. Let’s say that a while ago, I set up a lump sum of investment with a total of \$10,000 CAD towards a Canada Savings Bond (CSB) and a Guaranteed Investment Certificate (GIC) from one of the Big Five, but because of my memory problem, I forgot what were the exact amounts I allocated to my CSB and GIC. However, since I am not totally out of my mind yet, I still remember that my bond earns at an annual interest rate of 2%, and that my GIC is a bit higher at 6%. I also know that both of my investments are compounded daily, and payable at the end of each month.
But the question is this: Let’s say that at the end of 10 years of dedicated investment, I end up earning an interest totalling up to \$5000 CAD. Can I somehow use this information to help me recover how much I invested in CSB and GIC in the first place?