Traditionally, there were times when mostly, women in the household used to save money in utensils or in some pots. As time grew, savings began to be kept in lockers at home. Thus, as India enhanced further savings were now kept in Savings Account in the Bank.
Shockingly, some people are still stuck with saving their money in savings accounts. This is because it is a traditional belief of people to be safe and keep their money safe, even when it’s not growing. The majority of public banks are now giving an interest rate of only 2.7%, which is quite low.
People end up saving more for future needs, but their focus should be on using that savings to even grow their money more! Eventually, with the growing pace of inflation of 6% & price rise in the economy, you can’t afford to let your money sleep off in the bank as the value of your money is not at all growing!
The real question that arises here is that What can you do instead of keeping your money in a savings account?
Well, let’s take you through smarter investment options as per your needs!
Short Term Investments
Narrow down your savings account money and focus on keeping a surplus for 5-6 months. You might believe that by having a savings account you won’t be tempted to use that money, unfortunately, it’s not true. You eventually, at some point might get tempted to spend. There are 3 options that you could consider to keep your money and give them an opportunity to grow as well!
1. Liquid Mutual Funds
Liquid Funds are believed to be the best when it comes to investing for short-term needs. Unlike other investment options, there is no exit load (penalty)to withdraw money. The money, after selling Liquid Mutual Fund is received within 24 hours. It provides returns somewhere between 5-7%, slightly better than FDs, and far better from a savings account.
2. Debt Mutual Funds
If you plan to invest for, say, 1 to 3 years, then debt mutual funds are a suitable investment product for you. Here also, the risk is minimized and the returns provided are higher than your regular savings account. The best thing about this fund is that it is not influenced much by market movements. They are less volatile in nature.
Regular Long-Term Investment
Keeping money in your savings account won’t grow your money unless you make that money work for you through long-term investments. Make sure to do regular long-term investments that will grow your money, as, in the end, you would want your money to grow than what you currently have!
1. Equity Mutual Funds
Equity mutual funds, also known as Growth funds are predominantly invested in a company’s stocks/shares. This is quite a preferred choice of investment tool for investors. The best part is that you can also start investing through SIP (Systematic Investment Plan). This way you’ll be investing your money monthly through SIP. Although investing in equity mutual funds comes with high risk, but eventually, you end up earning high returns too!
2. Low-Cost ULIPs
ULIP or Unit Linked Insurance Plan ensures the financial safety of your loved ones, It also secures your future by making the right investment choice. The best part about ULIP is that you can avail risk cover and fulfill your financial goals, that too at the same time. Secondly, ULIPs are an excellent source of tax-saving instruments.
ULIPs provide you with an opportunity to invest in equity-oriented funds!
Also Read: Best Investment Options in India
A savings account has its benefit, but if you wish to grow your savings with better returns but why not go for that opportunity? Why not move ahead from the traditional ways of savings and focus on the new approaches!!