Finance plays a very important role in everyone’s life and we have to plan strategically for the present and the future. The past few years, and especially the period of the COVID-19 pandemic, have been brutal for all of us owing to the low-interest rates.
But now with everything coming back to place, now can be a very good time to boost your savings.
Why Right Now?
Though now savings accounts pay generously, you’re more likely to earn a higher return on your money in a brokerage account. However, this shouldn’t come in the way of boosting your savings as now is the best time.
Firstly, let’s think of the future. With recession and inflation hitting our neighbouring countries, we must be cautious as we could possibly be next in line. In such a scenario, if we make use of the savings account, we can cushion ourselves for at least some time.
Unlike in previous years, now the banks are generously paying high interest rates. Hence, this means that if you boost your savings account, you can earn more interest in return.
Interest Rates And Investments
Consumer banks base their loan, credit card, savings account, and CD rates on the Federal Reserve— when the Fed raises rates, so do banks. Even if the Fed raises its benchmark rate, it will take some time for the increase to be reflected in your bank account because savers saved so much money during the coronavirus pandemic that banks no longer need to compete for our money as they have plenty in store.
Another smart way to save more and plan strategically is to invest. You can set aside a certain amount of money every year for the next five years and then you can get a large lump-sum amount.
Savings During Inflation
During inflation, everything costs more creating a hole in our pocket and this makes us change the way in which we handle our money. Hence, when borrowing costs rise, higher interest rates trickle down to consumer products like loans and mortgages, making them more expensive.
Saving during inflation is tricky and might do more harm than good simply because during inflation we have to be extra careful about how we keep the money and where and how we spend it.
Hence, the conclusion is, the best time to do savings and boost your savings is never but now.
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