Save Invest Retire

How to Park Savings?

“You’re saving account is your vessel to get you from a goal to a reality”

As we have already begun saving, let’s park our savings fund at the best spot to keep it safe and win a few returns.

On the off chance that you have not begun saving yet, follow this link to find out about saving.

Why it is important to park our savings carefully?

When we have enough funds accumulated it is important to park our savings cautiously to protect it from numerous threats. These savings are the seeds of our fortune, the foundation of investment plans, and arrangements for retirement.

We can keep our savings in multiple folds like cash and saving account. Investing is a completely different aspect of a personal finance plan.

Here we will discuss keeping the savings in real cash and bank accounts.

How much real cash we should keep?

Business vector created by freepik – www.freepik.com” class=”ek-link”>Business vector created by freepik-www.freepik.com

Digging a hole in the backyard and putting all our funds in that pit for years is certainly not a good idea.

Though it is necessary to keep some of our savings in Almira for emergencies, keeping all savings in the form of cash will not do any good.

It completely depends on the individual how much savings to be kept in the form of hard cash. I guess savings equal to one month’s basic expenses would be enough.

Cash has already been replaced by digital payment methods these days like internet banking, UPI, Debit card, Credit card.

Carrying cash always has a threat of getting robbed or getting misplaced.   Cash sitting in your pocket is not going to pay you anything so we should look for a better option to park our funds.

  • Urge To Spend

We are one of the biggest threats to our savings. Whenever I have cash in my pockets I always have that itch to spend it. You know very well what I mean; we all have that inner voice to shop as soon as we have cash at our hands.

When we have cash at hand we always have that itching sensation to spend and shop.

  • Mental Stress

Keeping cash is stressful as it has many threats. It causes unnecessary mental stress and panic.

It is very inconvenient to keep records of cash brought in and went out. Especially it is very tiresome for lazy people like me.

So it is advisable to keep your savings in a bank account.

Objectives of parking savings in a Bank Account

Here we are discussing a dedicated bank account and not a regular bank account we use for the daily transactions.

Business vector created by freepik – www.freepik.com” class=”ek-link”>Created by freepik-www.freepik.com

  • Place of Safety

Funds are at utmost safety in a bank account. It is safe from burglars, getting misplaced and any natural calamities.

Funds in a bank account have insurance of Rs. 5,00,000. That means if the bank fails you will get up to 5,00,000 back as an insured amount. The saving account is secured by DICGC (Deposit Insurance and Credit Guarantee Corporation)

  • Earn Decent Returns

Unlike the cash sitting in your Almira the funds in the bank can generate returns. Banks pay decent returns on saving funds which at least help you compensate for inflation.

  • Convenience To Manage

Funds in a saving’s account are much easier to manage than physical cash. There are various modern tools to manage funds like debit card, android applications, internet banking, and cheque apart from traditional methods of deposit and withdrawal slips.

  • Easy To Open

It is easier to open a savings account in a bank than digging a hole in the ground to keep your cash. Saving bank accounts can be opened online as well as offline.

  • High Liquidity

Liquidity refers to converting assets or financial instruments to useful cash.

We can easily pull back cash without much of a stretch from a saving account using an ATM, Cheque, or withdrawal slip. ATM machines are at our service all over the country to withdraw cash anywhere in case of emergencies or while traveling.

  • Insurance For Operator:

Banks additionally offer security covers for account administrators including accident and death protection. This way we can get an add-on benefit apart from saving advantages.

So we have decided to keep a major portion of our savings in a bank account. Now let’s check what option we have in banks.

Easy options to park saving funds in Banks:

  1. Saving account

2.Fixed Deposit account.

  •   Regular Fixed Deposit Account
  •   Recurring Deposit Account
  •   Flexi Recurring Deposit Account
  1. Combined Accounts
  •    Auto sweep Saving Account
  •    Flexifixed Saving Account

 

What is a Saving Account?

A  savings account is a basic type of deposit account designed to keep your spared money safe. This account is dedicated to catering to the personal finance needs of the operator. It pays moderate interest, offers limited transactions, and convenient to operate. savings account is a basic type of deposit account designed to keep your spared money safe. This account is dedicated to catering to the personal finance needs of the operator. It pays moderate interest, offers limited transactions,s and convenient to operate.

What things I should check when opening a Saving Account?

• Min account balance

Most of the banks requests to keep minimum balance in saving account so that they can provide you the features of the account. The minimum balance ranges from Rs. 2000 to Rs. 1,00,000 depending on bank and type of account.

Some banks offers zero balance saving accounts. We should look for an account which either has zero minimum balance requirement or minimum balance requirement as low as possible to avoid the penal charges in case of full withdrawal of funds

  • Insurance For Operator:

Most of the banks requests to keep a minimum balance in saving accounts so that they can provide you the features of the account. The minimum balance ranges from Rs. 2000 to Rs. 1,00,000 depending on bank and type of account.

Some banks offer zero balance saving accounts. We should look for an account that either has zero minimum balance requirement or minimum balance requirement as low as possible to avoid the penal charges in case of full withdrawal of funds.

Some banks charge for issuing the debit cards. The charges are generally deducted annually from your account. The charges range from free to 500 per annum. The charges should be on the lower side.

• Interest Rate

Getting a return on our saving is one of our prime objectives. These returns prevent our saving funds from getting depreciated.

Interest rates for most banks lie between 3% to 7%. Some of the private banks like yes bank, Kotak Mahindra Bank offer interest rates more than 4%.  Senior citizens and women can get better interest in saving accounts in banks.

• Transaction limit

Saving accounts are meant to keep the cash you set aside or the cash spared after completing all the expenses. Saving accounts are not to be used for frequent transactions hence banks impose a limit to the number of transactions you can do every month. If the limit exceeds you need to pay charges for excess transactions.  We should check the quantity of exchange permitted and charges for the extra exchanges.

• Transaction charges

Apart from the excess transactions banks charge for other transactions like NEFT, RTGS, IMPS, etc. Before opening an account we should consult about all of the above things with a banker or demand a broacher to check the features of the account.

What are the benefits of a savings account?

  1. A savings bank account is very convenient to operate.
  2. Easy to open.
  3. The savings account requires minimal documentation to open.
  4. The Saving account generates returns.
  5. The services are available online as well as offline.

What are the limitations of a Saving Account?

  1. Generates lesser returns than Fixed Deposit.
  2. The number of transactions allowed is limited for a month.
  3. The returns generated are not Taxfree.
  4. The amount that we can withdraw or deposited has few restrictions depending on the bank.
  5. Interest rates are not fixed as in the case of Fixed Deposit.

What documents are required to open a savings account?

  • Proof of age and Identity
  • Proof of address
  • PAN card
  • Photographs

You can follow this link to know more about various Saving Bank Accounts: https://www.bankbazaar.com/savings-account.html

Follow this link to know more about DICGC: https://www.dicgc.org.in/index.html

“As an Amazon Associate I earn from qualifying purchases.”

Spread the knowledge
  •  
  •  
  •  

One thought on “How to Park Savings?

Leave a Reply

Your email address will not be published. Required fields are marked *