Keeping your money in a bank account is a smart way of stabilising your personal finances, but that's not the only option you have when it comes to savings.
Of course, you'll earn interest as you keep depositing money in a savings account, but it'll take many years to earn substantial profits. The reason is simpleâ€”the only channel adding money, in case of a savings account, is the rate of interest. With commodity prices escalating every year and a fluctuating economy, the need for an extra source of income becomes necessary.
This is why you should manage your savings better and be financially equipped to deal with cash crunches and emergencies that can turn up any time.
Here are 4 ways that'll help you manage savings to earn more.
1. Better rates for better savings
This list starts off with your savings account because it's always the first step towards multiplying your money. Don't simply open a savings account with the most popular financial institution in your vicinity. Shop around and ask lenders about the services they offer and emphasise on the rate of interest they're willing to offer. A financial institution that allows you to open an account with minimum balance, doesn't charge processing fees, and offers a high rate of interest should be your ideal pick.
2. Invest in mutual funds
You can save more by investing in mutual funds, stocks, and bonds. When you allocate your funds under these schemes, money will be pooled from many other investors as well and invested in stocks, bonds, or both.
There are plenty of mutual fund schemes in the financial market, but to earn maximum profits go with the ones that invest in shares and stocks. Research the schemes and evaluate the stocks you'll be investing in. Also, get in touch with the current investors to get an approximate idea of the returns you'll be earning from these mutual funds.
3. Taking on the lender's role
Instead of waiting to witness your savings multiply, you can lend it to someone who's in desperate need of money. Simply put, this method aka peer-to-peer lending allows you to be the bank. The tenure, eligibility criteria, and rate of interest will be decided by you. However, do take into account that lending money comes with potential risks. The loanee might default on the loan and disrupt your financial well-being.
To be on the safer side, check the candidate's credit worthiness, secure the loan with a collateral, and charge a high rate of interest.
4. Exploring the real estate sector
Stepping into the real estate sector is always beneficial because it's a long-term investment venture that gives excellent returns. Moreover, you possess an asset that can be used to obtain loans in the future.
If you don't have money to purchase a property, you can take a Home Loan to fund the project. When you're on the hunt for a home loan, apply online to start the process quickly. But before that, check if the loan terms and conditions suit your financial standing and repaying capability. Another area of focus should be the rate of interestâ€”it must be as low as possible. To get an idea of interest rates, you can utilize Home Loan calculators that will not only help you determine the rate of interest and tenure, but will also estimate the approximate EMI amounts you'll be liable to pay.
Your hard-earned money isn't just meant for lying idle in a savings account. There are plenty of ways in which you can multiply your wealth. However, before taking the plunge, you should strategies your finances, manage your expenses well, and seek help from financial experts whenever you're in doubt.