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How to Save & Invest with a Savings Account?
Posted on Wednesday, June 26th, 2024 | By IndusInd Bank
A savings account allows you to deposit money and earn interest as per the prevalent interest rates. In addition, this account permits withdrawals based on your requirements without any lock-ins.
Along with this feature, there are many uses for a savings account. If leveraged intelligently, a savings account can help you save and invest money and create wealth over the long run. Read on to know more.
Ways to Save and Invest with a Savings Account
Here are some tips that you can use to maximise your savings account experience:
1. Create a term deposit
You can create a term deposit with the available amount in your savings account.
For the uninitiated, a term deposit is an account where you deposit a pre-fixed amount for a pre-specified tenure. This disciplined approach can help you chart your savings and investment journey in a better way.
Term deposits can be of two types: fixed and recurring.
Here’s more information about them –
| Parameters | Fixed Deposit (FD) | Recurring Deposit (RD) |
| How does it work? | You deposit a lump-sum amount at once for a set period. The money accrues interest over the tenure. | You deposit a comparatively smaller amount in regular instalments for a set period. The money accrues interest throughout the tenure. |
| Whom is it ideal for? | Ideal for those with a lump-sum amount they need to deposit. | Ideal for those with a regular source of income and who need to keep a portion of savings aside. |
With IndusInd Bank, you can also take advantage of the sweep-in/sweep-out facility, to enable the automatic transfer of money from your savings account to a term deposit. When the balance in your savings account drops below the minimum amount, the funds necessary to maintain the minimum balance are transferred from the term deposits.
Also Read: How to Save for Your Retirement with a Savings Account
2. Keep separate savings accounts for different financial purposes
To ensure an organised savings and investment journey, consider opening separate savings accounts for each financial purpose.
So, for instance, you can keep three savings accounts and utilise them in the following way:
- 1st account – It can be used for daily expenses like everyday merchant payments, social outings, etc. In short, the purpose of this account can be solely regular withdrawals.
- 2nd account – It can be used for your investments. You can link it to your mutual funds for seamless transfers every month. Also, you can use this account to keep your emergency funds.
- 3rd account – It can be used for large monthly payments, such as rent, EMIs, utility bills, credit card payments, etc.
This can be a good financial template to get started with if you are figuring out how to save and invest money. Make sure you allocate money for each account carefully and adhere to the allocated amount.
3. Create and follow a budget
You may have already heard this advice numerous times – budget your expenses. Yes, following a strict budget is a non-negotiable. Identifying problem areas and correctly redirecting your money is crucial if you want to know how to save money for investment. A budget can help in this regard.
You can create a budget at the start of each month. Set aside a fixed amount for each expense category. Transfer only the total of that amount into the savings account you have created for daily expenses.
At the end of each month, review your expenses to see where you can cut back. As you keep improving your budget and expenditure, your savings will increase month after month.
To sum up, being disciplined and smart with your money is crucial if you want to save and learn how to invest money wisely. While saving and investing may seem difficult initially, it becomes easier and more rewarding in the long run.
Looking for an easy, paperless and 100% digital bank account opening process? IndusInd Bank has you covered. Start banking with IndusInd Bank today!
Disclaimer: The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.
