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Your savings are lazy — here’s how to make them work hard for you

Indian businessman with his contemplating his financial position

Your savings are lazy — here’s how to make them work hard for you

You work hard for your money, so shouldn’t your savings do the same for you?

Leaving cash in a savings account is not the best way to grow your funds. How do you get your money to evolve from a sluggish plodder to healthy sprinter? If you’re just beginning to think seriously about growing your wealth, look no further, the advice and tips below will help you whip your savings into shape and kickstart your financial planning journey.

Don’t wait, start saving now

The earlier you start investing, the more time works in your favour, thanks to compound interest. Compound interest is when a principal layer of interest starts to accumulate its own interest. And the earlier you start, the more this affects your bottom line. Let’s say you want to get ₹1 crore by age 60. Assuming a 6% return rate, if you start saving at 30, you only need to put aside about ₹10,000 per month. Start the process just 10 years later at the age of 40 and you will need to put aside more than double that: over ₹21,580 a month. That’s a huge difference. By starting just 10 years later you will have to find an extra ₹139,000 every year. A second benefit of starting early is resilience. It allows you to weather the ups and downs of the market.

Know more, about our Systematic Investment plans.

Identify your long-term goals

Start by thinking about your financial goals: what do you want to achieve? When do you want to achieve it? You may need to renovate your house in five years, or you may want to buy your first car in 12 months. Once you have established the size and timeline of your goals, you then have something clear to work towards. For goals that are small amounts you will be able to save up to reach them. For larger amounts, and if you have a longer time line, investing will help you hit your target. This is a good time to look at the various investment options available to you such as stocks, mutual funds or investment linked insurance plans, and decide which best suits your needs. These generally offer higher returns than savings accounts or term deposits in the long term.

Know more, to plan your financial goals.

Use budget trackers and apps

Go digital, and your wallet will thank you for it. Our research has shown that people who actively use digital tools such as budget trackers (or investment calculators) and online transactions save, on average, 8% more than people who don’t.  Budget trackers and apps that connect to your bank account show you how much you are spending and how on- or -off track you are, meaning you can quickly course-correct. This is why those who use them find more success.

Make saving a habit

If you’ve always used savings accounts and wonder if you can get higher returns with other investment options, mutual funds are a logical next step. The returns are potentially higher than a savings account in the long term. Many mutual funds have Systematic investment plans (SIPs) so you can contribute the same amount every month, starting from as low as ₹100 a month. SIPs utilise the principle of rupee cost averaging too. Since your investment amount is fixed every month, rupee cost averaging means you buy fewer units in a fund when the price is high, and more units in a fund when the price is low. The cost of each unit can then be averaged out over time. For example, you would buy more of your favourite foods at the supermarket when they are on offer than when they are on sale at full price, averaging your spend over the year, maximising your buying power when prices are low.
As an investor, rupee cost averaging allows you to make a gradual entry into the market, and build a strong investment position over time, without needing to commit to a large amount of capital upfront or risk investing a big sum of money at a time when you may not have the cash available.

Want to start your investment journey? Talk to our financial experts at Standard Chartered Premium Banking today. Our Premium Executives will be with you every step of the way as you plan your future to help you achieve your savings and investment goals.

Know more, about our Savings account and deposits.

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Disclaimer

This article is brought to you by Standard Chartered Bank India. All information provided is for informational purposes only and is not intended to be construed as advice or an offer for any product or service. Standard Chartered is not liable for any informational errors, incompleteness, delays, or for any actions taken in reliance on information contained herein.

Standard Chartered Bank does not provide any investment advisory services under the wealth proposition. Standard Chartered Bank in its capacity of a distributor of mutual funds or while referring any other third party financial products may offer advice which is incidental to its activity of distribution/referral. Standard Chartered Bank will not be charging any fee/consideration for such advice and such advice should not be construed as ‘Investment Advice’ as defined in the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 or otherwise. Mutual Fund Investments are subject to market risk. Read scheme related documents carefully prior to investing.