Introduction:
Saving money is a crucial part of a sound financial plan. It allows you to earn interest on your money and create a corpus for future financial goals. However, not all savings avenues offer the same interest income. The rate of interest can vary significantly from one savings instrument to another. And in a world where every penny counts, maximising your returns becomes crucial.
Whether saving for a rainy day or planning for retirement, earning more interest on your money can accelerate your financial goals. In India, with a diverse range of financial instruments and savings options, there are several ways to boost the interest you can earn on your money.
Start Investing with Free Expert Advice!
In this blog, you will explore the five easy strategies that can help you earn maximum interest on your money. Keep reading.
1. Switch to a higher-interest savings account
One of the simplest ways to earn more interest on your money in India is by choosing a high-interest savings account. Savings account interest rates in India may vary from one bank to another and may range between 3 to 6 per cent per annum. Many banks offer savings accounts with typically higher interest rates than regular savings accounts. Additionally, some banks offer higher interest rates for maintaining a higher minimum balance or for opening accounts online.
Thus, you can look for a savings account with a competitive interest rate and minimal charges to maximise your earnings.
2. Park your savings in fixed deposits
Fixed deposits (FDs) are a popular investment option in India known for their safety and stability. When you invest in an FD, you agree to lock in your money for a specific period, during which you earn interest at a fixed rate. Although the interest rates on fixed deposits may vary depending on the deposit amount, tenure, and the bank's policies, they are higher than the savings accounts.
To maximise your interest earning, consider opting for FDs with longer tenures or investing larger sums. Additionally, some banks offer special FD schemes with higher interest rates for senior citizens, so explore these options if applicable.
3. Consider investing in mutual funds
For investors seeking potentially higher returns, mutual funds can be a lucrative option. Mutual funds pool money from multiple investors and invest them in a diversified portfolio of stocks, bonds, and other money-market securities. While mutual funds carry market risks, they also offer the potential for higher returns over the long term.
As a conservative investor, you can choose to invest in debt mutual funds, which primarily invest in interest-generating instruments and offer guaranteed returns. Look for mutual funds with a track record of consistent performance and opt for systematic investment plans (SIPs) to benefit from rupee-cost averaging.
4. Open a Recurring Deposit (RD) account
If you do not wish to invest in a mutual fund through SIPs, opening a recurring deposit (RD) account can be a great alternative. It allows you to deposit a fixed amount of money every month for a predetermined period, and you earn interest on the cumulative deposit.
While RD interest rates may be lower than those of FDs, they offer flexibility and are ideal for individuals with regular income streams. To maximise your earnings, consider depositing higher amounts or opting for longer RD tenures.
5. Invest in government savings schemes
The Government of India offers various government-backed savings schemes that provide attractive interest rates and tax benefits. Popular schemes include the Public Provident Fund (PPF), National Savings Certificate (NSC), and Sukanya Samriddhi Yojana (SSY).
By investing in these schemes, you can earn higher interest rates compared to traditional bank deposits while enjoying tax benefits under Section 80C of the Income Tax Act of 1961. These schemes offer guaranteed returns and are considered safe investment options.
In conclusion
Earning higher interest on your money in India doesn't seem to be rocket science. By leveraging a combination of high-interest savings accounts, fixed deposits, government savings schemes, and mutual funds, you can optimise your savings strategies to generate higher returns.
However, make sure to assess your risk tolerance, investment goals, and time horizon before allocating your funds. With careful planning and strategic decision-making, you can make your money work harder and achieve your financial objectives faster.
Trending Blogs: NSE Holidays 2024 | BSE Holidays 2024 | Invest in Small Cap & Mid Cap Mutual Fund & Stocks | Companies affected by Rise in Crude Oil Price | Fall in IT Stocks | Launch of 4 New Indices | Revised Lot Size of Nifty Contracts | Impact of RBI Circular on Currency Trading | RBI’s New Lending Guidelines | Electric Air Taxis in India
Financial Calculators: SIP Calculator | SWP Calculator | Compound Interest Calculator | EMI Calculator | FD Calculator | Retirement Calculator | Option Value Calculator | Inflation Calculator | Lumpsum Calculator
Popular Stocks: ICICI Bank Share Price | HDFC Bank Share Price | CDSL Share Price | UPL Share Price | TCS Share Price | BHEL Share Price | Trident Share Price | IRFC Share Price | Adani Power Share Price