6 Benefits of Investing in Savings Account

If financial security is on your mind, you are on the right track to living life. With inflation rising by the day, a global pandemic changing the course of lives, and the increasing needs and wants of the modern world, investing your money is critical. Investing secures your future and provides you with financial independence. However, of all the various instruments out there, an ideal investment option may have been in front of you this whole while that you haven't explored for all its benefits - Savings Account. Understanding the importance of investment savings within a savings account can significantly contribute to your long-term financial goals.

A savings account is perhaps one of the most convenient, practical, and low risk investments you can consider for your present and future financial security. It can help you in an emergency and, at the same time, be helpful for goal-based savings. Understanding the significance of investment savings within a savings account can provide both stability and growth opportunities for your financial well-being.

If you have not yet used a savings bank account as a viable investment option, you may want to change your mind after reading this.

Savings Account – the ideal low-risk investment option

Here are some ways in which a savings account can help you keep your investments on track:

It carries low risk

When you think of investing, you think of maximum gains. While most investments carry some amount of risk and offer different gains, there are a few options that offer low risk with profits. A savings account is one of these.

You do not have to worry about market highs and lows with a savings account. You can earn a steady interest that is not market-linked that helps your money grow without volatility affecting its growth. All you need is a single investment or regular deposits into your bank account. The funds will start garnering interest after that. If you want to make the most of this, you can pick the IDFC FIRST Bank Savings Account that offers up to 7% interest. Such a high-interest rate can help you tackle inflation and meet your future needs. Moreover, you earn the interest irrespective of the market conditions, making it completely low-risk. 

The interest earned is also credited to your account monthly. Whether you deposit a lumpsum amount or regularly, you will be able to earn more through interest. This can be one of the most brilliant low risk investments for most income groups and ages.

It offers convenience

A savings account is an easy and hassle free investment tool. There is no need to carry out detailed market studies or devise entry and exit strategies. While many other investments may demand some basic knowledge of the market, opening or managing a savings account is quite simple and straightforward. You need no prior understanding. If you do need any help, you can simply reach out to the bank and have your doubts cleared. The account opening process is also pretty quick. All you need to do is submit your KYC (Know Your Customer) documents like a PAN Card, Aadhaar Card, etc. The verification can be completed digitally via a video call which means you do not even need to step out of your house and can be well on your way to financial freedom.

It is ideal for long term savings

A savings account can be perfect for long term savings. You can use it to plan for various goals like purchasing a house or planning for your retirement, among several others. Bank savings accounts are a safe place to store your money. They offer protection from theft or loss and, at the same time, add value to it with regular interest. As long as you pick a good and trustworthy bank, you can safely use your savings account for long term financial needs.

It is suitable for emergencies

Liquidity is one of the greatest benefits of savings accounts, especially compared to other traditional options like fixed deposit accounts. High liquidity makes savings accounts the perfect emergency fund account. You can withdraw your money from a bank account anytime you want. The turnaround time is quick, and your money can be with you instantly. Compared to several other options that may take at least a few days before your money is redeemed, a bank account can be extremely useful in the case of an emergency.

Further, banks like the IDFC FIRST Bank offer free and unlimited ATM transactions with their savings accounts that lets you access your money in your hour of need. In addition to this, the bank also gives you pre-approved loan offers that can be instrumental in an emergency.

Another way that a savings account can help you or your loved ones in an emergency is through an insurance cover. You may not know this, but savings accounts also offer insurance coverage to help you and your family members get through rough times. For example, the IDFC FIRST Bank Savings Account comes with an air accident insurance cover of Rs. 1 crore. You get this insurance absolutely free at no cost. The bank also offers another free personal accident insurance cover of Rs 35 lakh. Together these free insurance covers can provide the required financial security for you and your loved ones.

It can help you save on tax

It goes without saying that the interest you earn from an investment is taxed. This is true for all types of investments. The interest earned from a bank savings account is also taxed. It is added to “Income from other sources” on your Income Tax Return (ITR) form and taxed according to the income tax slab you fall into for the concerned financial year. However, as per Section 80TTA of the Income Tax Act, 1961, you can claim a tax exemption of up to Rs 10,000 on the interest earned from the savings account. This means that only interest above Rs 10,000 will be taxed in a year. If you are looking for a tax break or want to save tax on your investments, a savings account can be an excellent way to do so.

It can offer a host of other benefits

A savings account is more than just a savings vehicle. It can offer umpteen other features, such as vouchers on a debit card, cashback on card payments, high purchase limits, and more. Savings accounts work in totality to make investing fun and lucrative for you. They go above and beyond the traditional offerings and provide you with a financial tool that helps you earn, save, and spend money optimally, so you can benefit from every transaction made through the account.

To sum it up 

If you have been considering investing your money, you do not have to look any further. A high-interest yielding savings account is a must-have in your investment portfolio. It is suitable for beginners as well as experienced investors and can be the ideal pick with its myriad of offerings and valuable features with low-risk returns, additional benefits, convenience, and above all, lucrative interest rates.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.