The best way to save money for the future is to protect the yield on the amount in a bank savings account, as interest rates have started to fall.
Best plan to save money for future
Although deposit investment is safe, one should keep an eye on the interest rate trend. Similarly, one should also consider the interest rate on the amount deposited in the bank savings account. In the changing interest rate environment, banks have started reducing the interest rates on deposit and savings accounts.
Recently, leading private banks have reduced the interest rate on savings accounts to 2.75 percent. State Bank, a public sector bank, offers an interest of 2.70 percent.
Although the money kept in a savings account is safe, the yield obtained from it should be calculated. Therefore, it is necessary to manage the savings account money properly.
Deposit Fund
When considering alternative investment opportunities that can yield high returns with savings account money, the monetization and security aspects should also be taken into account.
When considering savings account money, there is an opportunity to transfer money to a bank account that offers higher interest. Some private banks offer higher interest rates, but you should keep in mind that there are different rates.
In addition, you should open and maintain a new bank account for the additional interest rate. Therefore, you can consider the deposit fund option. If you invest in a short-term deposit fund, you will get a higher interest rate than a savings account.
However, the money will be locked in the deposit fund for a certain period of time. If you need money in the meantime, you will have to break the deposit fund and take it out. Also, the interest rate on the deposit fund may decrease further in the coming months.
Liquid Fund
You can also consider the option of switching from a savings account to a deposit fund. It should be noted that although there is a facility for early withdrawal, the interest rate will be adjusted accordingly.
Another alternative to the savings account amount is the ‘liquid fund’. These types of funds, which fall under the mutual fund category, are considered suitable for short-term investment.
Liquid fund investment also has the feature of monetization. You can withdraw money at any time. On average, it can provide a return of 5 to 6 percent. These funds are also considered favorable for tax purposes.
Similarly, there are very short-term funds. There are also hybrid funds. Although the returns are high in these, the associated risk factors should be considered.
About The Author
Staying informed about current market trends is crucial for making sound financial decisions. Protecting the yield on savings in a declining interest rate environment requires strategic planning. Utilizing reliable financial resources can help maximize returns and minimize risks. How can one effectively diversify their savings to safeguard against fluctuating interest rates?