Before you open a bank account online or offline, you must ensure to understand its purpose and ways you can use it to maximise your financial corpus over time. As you might know, a savings account is one of the prudent routes through which you can accumulate your funds safely and generate interest over time for your short-term goals. However, if you are eager to maintain a savings account solely for the purpose of generating wealth to meet your financial goals, you can open a separate account, just for the saving and investment purpose and don’t use it to make any purchases.

How to maximise your financial planning using a separate savings account for investments?

  1. Before you hit on the online saving account opening option, ensure to check the eligibility for opening the bank account and the features and interest rate available to you. Apply for the account only if it matches your needs and the interest rate offered assures to meet your short-term goal within the investment horizon.

  2. Try to look for a savings account offering competitive interest rates and low fees in order to maximise your returns and minimise your costs.

  3. Set specific savings goals for this savings account, such as saving for a vacation overseas, renovating your home, or building a retirement corpus.

  4. Estimate your prevailing income from all sources and list down all the expenditures to be incurred monthly. Set a tight budget and ensure to stick to it. Keep aside the money left as monthly savings and keep depositing it in the savings account you opened separately.

  5. Set up automatic deposits into your new savings account from your primary account or salary account to ensure consistent and disciplined contributions.

  6. Make use of the saving account interest rate calculator to calculate if the interest constituent generated on the savings account along with your capital allows you to meet your financial goal on time.

  7. Besides generating interest via your savings account, another prudent way to enhance your parked funds in a savings bank account is to use the account to make investments in fixed-income instruments such as fixed deposits and recurring deposits.

  8. A fixed deposit is a beneficial instrument if you have a lumpsum amount and want to invest to earn satisfactory returns over time. In this type of investment option, you can generate an interest component on the overall amount you deposit and liquidate the interest and principal constituent by the end of the investment term. A recurring deposit account may be a preferred investment option if you are looking to invest a fixed amount per month to generate interest on your deposit.

Ending note

Having a separate savings account solely for savings for your future goals is important. However, before you hit on the online savings account opening option, ensure you compute your monthly fixed expenses, such as rent and utility bills. Doing so would allow you to know the amount you can put in this newly created savings account monthly to create a corpus over time. You can also use a portion of your savings to deploy towards fixed-income instruments like fixed deposits or recurring deposits.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.