Having some cash stashed away for a rainy day is important. However, if you’re saving for the future and you want the best potential growth, it’s worth considering the limitations of a savings deposit account and the trade-offs you might need to make for easy access.
Saving makes good sense, but for anyone who needs to think beyond the emergency fund, it’s not a financial plan on its own. To build wealth, fund your goals and path the way to a healthy financial future, it’s wise to think about saving as a cog in the wheel and build a more comprehensive plan around it.
As inflation rises, your money’s spending power reduces and if you can’t make up the shortfall with interest, ‘the silent thief’ will have a field day with your savings.
If your deposit account can’t keep pace or beat inflation, saving could even prove counterproductive.
Everyone likes to think of interest as something that works its magic in the background and adds quietly to our savings pot, but with the best annual return available at just 0.6%* before tax, it’s going to take more than magic to make any real difference to your balance.
*Source: bonkers.ie – 9 September 2017.
Easy access and account activity go hand-in-hand, however if your savings provider charges you to withdraw or move your money, adds maintenance fees or applies penalties if you fall below their minimum balance requirement, you could find yourself paying them more than you earn in interest.
Weddings, kids, houses, retirement, even quality of life, all come with price tags and unless you’re expecting a nice big windfall to cover the lot, you might have to look beyond your savings account to pay for them.
Savers understand the importance of a financial cushion, but if your life goals are likely to cost more than you can put away each month, it might be time to look beyond low-interest deposit accounts and consider even a low-risk life assurance investment plan as a way to make your money roll up its sleeves and work harder for you.
Original Source: www.irishlife.ie/investments/investments-hub/5-reasons-to-rethink-money-on-deposit