updated on 28 Sept 2016
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Money sitting at savings account will take you nowhere
Too much cash in savings accounts is a well-kept secret of personal finance. Many of the us do not make investment decisions, but allow money to lie in the bank, earning returns that do not even beat inflation. One of the reason for doing this is too many choices, we simply do not choose. We worry about making the wrong choice and living with the regret of not choosing one thing over the other. The money in the bank is not earning a lot, but it is at least not losing value due to a wrong choice is what we think ourselves but in long run this idle money is losing value.
How to move idle money lying in saving bank account and get returns for future needs
1) If you are holding back because of any past mistakes in investments then approach some advisor or research yourself on internet and start investing newly. Do not regrets of the past to dictate your current decisions. 2) Do not complicate your investment decisions. It is easy to be led into believing that the best way to invest is to set goals, and save in a basket of products for each one of them. Do not out all your money in single investment type. You have lot of choices. You need to move the wealth that is parked in the garage and this is your only goal. 3) Make an annual plan that involves a maximum of four or five investment products. Find some time to research or get in touch with any advisor. There is no hassle if your advisor asks for fees. If you choose equity shares, make sure you have done your research and know what you are doing; if it is funds choose using long-term (10 year) performance; if it is property, be sure you have investment in mind and are not mindlessly accumulating dud assets; if it is bonds, ensure that you are not investing in poorly managed companies merely because they are government-owned. Keep your advisers on their toes, asking them to provide the investment rationale and comparisons. They are paid to help you make these choices. Review this list annually and do not hold more than 10-12 items in all, at any time. 4) Invest through the year into the chosen products. Every time you have money in the savings bank, do not burden yourself with having to look afresh at all your choices to make an investment. You have decided at the start of the year, and stick to the names you chose. Do not be taken in by ideas of “market timing” or for any new product launch. Side step all those temptations and stick your plans which you have made at the start of the year. 5) Get started, nothing else matters more than that first step. Money lying in saving bank account is losing its value due to inflation so put it for use so that your future needs can be taken care off.