Do you wish to save money in your bank account or create more wealth by opting for a fixed deposit? We help you decide.
The desire to create future financial security for yourself and your loved ones runs so strong, that you are always on the lookout for suitable investment opportunities to create wealth. But often the best ways are the simplest ones – as is demonstrated by savings bank accounts and fixed deposits.
Both are reliable options for wealth creation, and they assure you of stable, regular growth on your money as well. But which one is better for you, and which one can create more wealth faster? Let’s attempt to find out.
How you can create wealth via savings
* Set aside money from your job or business income every month. Say you set aside Rs 5,000 every month. In a year, you can save Rs 5,000 x 12 months = Rs 60,000. Every year, increase the savings amount by Rs 2,000 so that a higher savings fund is created.
* You can create a separate savings account for this money. Leading banks pay 4% savings account interest on the saved money. The more the money saved, the higher is the earning on it via interest.
* You can continue saving money in this manner and gaining savings account interest on it. Over the years, you can create wealth for yourself by dint of regular savings.
How you can create wealth via a fixed deposit
* Fixed deposit accounts are opened by setting aside a lump sum amount of money for a certain number of months (i.e. the deposit term or tenure) at the prevalent rate of interest that your bank offers at the time.
* Leading banks are offering higher rates of interest – 7% and above – for tenures ranging from 2 to 7 years. Shorter tenures (in days or up to one year) get a lower rate of interest.
* Thus, the higher rate of interest on the money helps the corpus grow well. In fact, you can consider switching your savings account fund to a fixed deposit for higher appreciation via a higher rate of interest.
* The fixed deposit is a safe investment option, considering that the rate of interest does not change throughout the deposit tenure. This is unlike other investment options, whose returns fluctuate as per market rate changes. We hope the above information helps you decide whether to stick with savings accounts or go with fixed deposits to create wealth. Do list down your future goals and put a time frame on each. Doing so will help you judge which goals are better suited to a savings account and which can be better served with a fixed deposit.