Is bank savings a good financial planning?

Malaysia
January 10, 2007 10:29am CST
I do have savings in the bank. Over the years, with all kind of fluctuating bank rates, I find that bank savings do not actually benefit me. The amount of interest I get annually is way below the present inflation rate. Someone told me that putting my money in the bank is actually a loss if we look at it carefully. What is your view on this issue?
4 responses
@zepche (26)
• Philippines
17 Jan 07
there are alot of better alternatives than a simple bank savings account. You are right that savings account's annual interest rate is way below the present inflation rate, that is why we should look for other investment vehicles that we could put our hard earned money. As for me, I put an equivalent of 6 months salary in my savings account, and the rest i put in a mutual fund. But it really depends on how could you tolerate risk. In investing, they say that the lower the risk, the lower the gain, but highger risk would also mean higher gains.
1 person likes this
• Malaysia
18 Jan 07
I think you have a point there. As much as the inflation rate affects our spendings, we still need to keep a cash pool in our savings account. As for risk, most businesses are volatile in one way or another. Take for example, even online businesses, they have theri ups and downs. Not to mention stock trading or mutual funds.
• Australia
10 Jan 07
You should always maintain a balance of cash savings which are instantly available in order to cover you for any unseen emergencies. However, any more than say 6 months of your salary in cash savings is probably unnecessary - I would advise that you look for other investments with higher returns such as stocks or mutual funds to invest the rest so that you make your money work for you and grow faster than inflation. I typicially am even a little more aggressive than this - I keep no more than 2 months salary in cash savings and I continually invest the rest into stocks and managed funds. I have a rolling investment strategy that puts $500 a month into a selection of managed funds which is matched $ for $ with a margin loan to increase my investment using borrowed funds. On top of this I invest around $500 - $1000 a month in direct shares on the stockmarket. I also trade options on the stock market in the short term with an account which I keep around $5000. For the money which you keep in cash savings - I'd advise you look around for the best interest rate on your savings whilst still being able to access then instantly. I have an account with Westpac (australia) which allows me to use an online savings account which pays around 6%, which is pretty good for instant access savings. For more information on investing in stocks and managed funds have a look at this free website: www.sharedigest.com Godd luck
@radesh (694)
• India
19 Jan 07
i do prefer bank account though the intrest is less its a safe place i feel
@xiongqh (793)
• Hong Kong
18 Jan 07
I don't think so, there are many choice to select. you know invest have many ways, low risk, medium risk, high risk, depending what you want, you can invest your money wisely. I think we can make a group to invest, some invest in high risk to get high profit, some in low risk investment to insure the money is safty. it is low rate to save money in bank, sometimes it will worth less than before.