Don't let your hard earned money waste away in your Savings Bank A/c
Every month we get salaries into our bank account. However, we leave our money for some time without paying any attention to it and take action when we have to make tax saving investments. This is called idle money, which earns a very small amount of interest. Should you let your hard earned money be idle in a Savings Bank Account? In this article, I will help you with some of the facts about idle money and how you can be smart in investing in investment options with #PaiseKoJagaaao concept.
Also Read: Best Investment Plans for higher returns in India
How money in savings accounts is practically dead money?
You might get your salary into your SB account. If you are doing business, you might transfer some money to your SB account every month for regular routine expenses at home. However, we leave such money in Savings Bank account without knowing that it is kept as dead money. Most of the SB accounts provide you 4% annualized interest. E.g. if you earn earn Rs 50,000 per month as salary and you keep such funds for say 1 month in SB account, you are getting Rs 2,000 per annum or Rs 167 per month. Such small amounts are peanuts for you and your family.
How Inflation Rate is increasing year on year?
In plain simple words, an individual should think about how the inflation rate is increasing year-on-year to understand more about their hard earned money is lying idle. Here are some statistics about Consumer Price Index (CPI) which is used to calculate Inflation.
CPI for 2012 – 9.3%
CPI for 2013 –10.9%
CPI for 2014 – 6.37%
CPI for 2015 – 5.88%
CPI for 2016 – 5.71%
If you observe, in last 5 years, average inflation is over 8%. As an example, the value of an item which you purchased last year, you would have paid 8% more this year. Cost inflation is not just limited any specific industry. It includes monthly groceries, clothing, children's education, etc. However, college education and medical expenses are skyrocketing and its rising prices cannot be even imagined. In a recent study by one of the insurance company, health carecosts inflation is over 20% in the last few years. It is expected to rise over 15% in the next few years. Do you still think that interest on your idle money is able to combat such high inflation?
Paise ko Jagaao – Don't let your hard earned money lie in SB Account
Now you understand how inflation costs are increasing year on year. Don’t let your earnings lie in Savings Bank Account to earn some peanuts. You should study how many days / months you are keeping your money idle in SB account. Once you do your home work, you can consider various best investment options like good liquid funds or short term debt funds that can give you good returns. With some planning, you can make smart investments every month to get good returns on your idle money.
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Suresh
Paise ko Jagaao – Don't let your hard earned money waste away in your Savings Account
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With the taxation of 30% (for those in this bracket), does it still make sense to keep money in liquid/short term debt funds, if you want to redeem them at any time in an emergency?
Dinesh, Let us ask these few questions to ourselves. 1) If u invest in SB account, you would get 4% p.a. interest 2) If you move them to bank FD, you can get 4% to 8% p.a. depending on the tenure 3) If you invest in liquid / short term funds, you would get 6% to 8% p.a. interest. Which one you choose? All these can be withdrawn with 1-3 day of redemption period.
Good article
Keep only monthly expenditure in savings account.
If you go not want to put in liquid fund and want highest liquidity, at least put in bank which gives good interest on saving account like DBS 7%, yes bank/kotak up to 6%
Even if your money lying idle you will get 50% more than usual saving account.
I want to put money in liquid funds but i am afraid with its tax …or any other charges that come along with it.i have heard that they charge 33 percent tax…so i get insecure abt my capital also.
Could u plz help me in overcoming me this fear.
What about SB a/c (beyond Rs 10K) or bank FD? All these would still attract tax for short term. What I am saying is post tax, how we can get benefitted instead of keeping them in our SB account
Nice Article Sir
Thank you
vidya
Thank You Suresh for this information