Investing in Savings

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Investing in savings is one of the more stable methods to put your money into. It is one of the safest methods to watch your money grow. However, the time taken to see any profit is very slow. A savings account is the most basic and easiest form of investments. It can be opened by anyone from a young age and is accumulated over the years.

How it works?

When you open a savings account, your funds are pooled together by the bank for other purposes. This is a straight forward method where the bank will pool together funds from many accounts and use it for investments. They could use it to borrow money to others or to invest in various forms of securities.

The bottom-line is that you do not have a say in where your money goes. In fact, you will only be involved in depositing and withdrawing your funds as and when you like.

Types of accounts

The most common type of account is savings. This is where you are free to deposit any amount and withdraw when you need to. As long as you have the available funds in your account, it can be withdrawn.

Besides that, banks provide fixed deposit accounts. This is a more stable type of investment. When you decide to put a certain amount of money in a fixed deposit, otherwise known as FD, you are guaranteed of a certain interest.

Interest rates

The rule of thumb is that savings accounts have very low interest rates. This is based on the available funds you have in your account. The bank will always declare interests for your account periodically. This usually ranges below 2% which means that the more money you have, the more interest you will receive.

On the other hand, for Fixed Deposits, you will enter into an agreement with the bank to keep a certain sum with them for an agreed period of years. Occasionally, banks will have special promotions where you can enter into a fixed deposit scheme at a higher rate. The common rates for FDs are usually slightly more than 3% depending on the economy.

In most cases, the higher the amount you put into the FD, the higher the interest will be and for a longer period. It could be RM5,000 or RM10,000 but every amount will have their respective interest rate which usually comes with an agreement for a period of 3, 5, 10 years or more.


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