Last Updated on March 15, 2024 by Saira Farman
Saving money in a savings account is a popular choice for many people, but the return percentage isn’t enough to yield good returns in such an account. A savings account’s interest rate is calculated daily and credited on the last day of each quarter. A key disadvantage of a savings account is the low return on your money. In some financial institutions, savings accounts have minimum balance requirements, and if your balance falls below this level, you may be charged a fee. In recent years, depositors have sought to increase their savings returns by seeking alternative savings accounts, which generally pay lower interest rates.
There are numerous investment options to invest your money and increase its value rapidly with minimal market risk.
Investment in Money Market Accounts
Savings accounts are almost similar to money market accounts, except for a few restrictions. You can earn interest by investing in these accounts based on the interest rate prevailing in the money market. Money market accounts offer higher interest rates on deposits if you meet specific requirements, such as maintaining a minimum balance and limiting withdrawals. In addition, the money market account combines both saving accounts and current accounts by offering additional benefits like the ability to write cheques.
Invest in Liquid Funds
In addition to your bank savings account, liquid funds can be considered as an alternative if you primarily want your money in another account then the bank savings account. Known for having low risk, liquid funds have short maturity periods and are open-ended. As a result, liquid funds protect your capital and keep your funds liquid at the same time. Such investments offer around 7 to 8 percent annual returns, and you can withdraw your funds anytime in a day’s notice.
Invest in Government Bonds
The safest investments for investors are government bonds. Government bonds are a good option if you are looking for a place to park your surplus funds. Investors can purchase government bonds through RBI auctions and non-competitive bidding. The mutual fund route can be used to buy bonds, or investing directly with the government is also possible. A brokerage company allows you to invest in bonds per your investment capacity since bonds are traded at a high face value. Since government bonds are a low-risk investment option, these can be an excellent substitute for savings accounts.
Invest in Fixed Deposit
Fixed deposits provide you with the highest interest rates, which can help you, earn higher returns on investment. Fixed deposits are basically of two types: Normal FD and Tax saver FD. The tax saver FD comes with a 5-year lock-in period, whereas normal FD tenure ranges from 7 days to 10 years. Only tax saver FD provides tax benefits while regular FD does not provide tax benefits. If you invest in a tax saver FD with a minimum lock-in period of five years, you can get a tax deduction of up to Rs. 1.5 lakh under Section 80C.
For parking surplus funds, a fixed deposit is the most secure option because it offers guaranteed returns. But, on the other hand, fixed deposits provide better growth and more flexibility in terms of the development of your funds.
Fixed deposit calculator is an online tool that helps us make a financial decision by calculating maturity amount. The information shown by the Fixed Deposit calculator can help you plan your finances for the future, so you can see how to grow your savings. We can calculate the maturity amount by an online fixed deposit calculator, which is very helpful to plan for the future.
The return on your Fixed Deposit does not fluctuate with market fluctuations, so you do not have to worry about your hard-earned money. The rate of interest on most savings accounts is the same for everyone, regardless of age. However, senior citizens earn 0.25% to 1% more on fixed deposits than other deposit types. As such, a fixed deposit can provide you with financial support during your retirement years, allowing you to enjoy them as much as possible.
