Best Saving Rates

Best Saving Rates For Your Money

We all want the best saving rates for our money and so often we get caught false promises and banks throwing out bait just to hook us in and pay their bank fees. Savings rates is a complex issue because if you really want to make a wise investment and have your money grow as fast as possible, then you need to look at several aspects.

Obviously the actual rate is the first and most important thing to look at. Unfortunately most people look JUST at the rate and end up thinking its a wise investment. Rates can vary greatly and even 0.1% can make a huge difference in how your money grows - especially over long periods of time. For this reason its important that you always try and invest your money at the highest possible savings rate. There is off course one very important thing you need to look at and that is the issue of fees.

Banks are in it for the money and for the most part its perfectly fair that they take a fee for their service. The problem comes in when they either charge you too much or when there are charges that you did not anticipate. Often times, high interest savings offers make up for the high interest it offers by charging high fees. Its really important that you look at all the fees involved with your savings account. If necessary, ask your banker about it personally.

Are there a fee to open the account? Are there fees for withdrawing money from the savings account? Are there monthly or annual service fees? Make sure you list down all the fees and then compare the interest rates of different accounts alongside these fees. I can assure you that you will see a very different picture.

There is one more factor that needs mentioning and that is taxes. This is different for every country in the world, but as a rule of thumb all interest you earn is subject to taxes. There are however special types of accounts and incentives that governments offer to encourage saving. In some cases these are tax free savings and whenever possible you need to take full advantage of these as it can make a huge difference in the size of your nest egg.

How To Get The Best Saving Rates

The savings rate that you are entitled to can differ vastly from that of your neighbour as there are so many requirements and rules that banks institute for different accounts and different investment products. There are basically 3 aspects that affect the rate that you qualify for and as a rule of thumb, the more money you have to save the better savings rate you can qualify for.

1. Size Of Your Investment
If you have a sizable amount of money that you want to put into a savings account then chances are that you will qualify for a better interest rate. Banks are in the business of money and the more you can give them the better they will reward you. Obviously you can never have "enough" money in your savings account but as the amount you are saving goes up, the better rates you can qualify for and the sooner you start the better. Usually, anything above $10,000 can start getting preferential savings rates and once you hit the $100,000 mark you can get some pretty good rates with a lot of perks.

2. Investment Period
The second big factor that affects the rate you qualify for is the period for which you are investing. Most savings accounts have strict limitations on the amount of time you have to keep your money in that account. Although you can take your money out before the time elapses, its important to note that there are usually quite severe penalties and fees to be paid. For this reason its important that you only commit money to your savings account that is solely for the purposes of saving long term.

3. Investment Habits
The third factor that affects the savings rate that you can qualify for is the frequency with which you save. Some accounts have minimum monthly deposits and you are obliged to make certain minimum monthly deposits towards the account. As a rule of thumb, those who save regularly are rewarded and for many this is a great incentive to save a fixed amount every month. Its important to note that some accounts will carry penalty fees when you miss a regular payment while others will revert to a lower fee.

Types Of Savings Accounts

Investing money is by no means an easy task. The simple truth is that if you want to see high returns you will have to take high risks. Savings accounts are considered to be the safest and most secure way to invest your money. Because its such a low risk, the returns are pretty mediocre and for the most part normal bank accounts are nothing more than a place to store your money. The interest almost gets eaten up completely by fees and taxes and if you consider inflation, you might even lose with your money in a standard bank account.

There are however a variety of types of savings accounts and if you want the best saving rates, then its important that you do your homework and look for the right type of savings account.

Passbook Accounts:
These are the most basic types of savings accounts and although the interest is quite low there are usually no fees and no minimum deposit. You can move money in and out without any charges and its very secure. The FDIC insures these accounts for up to $100,000.

Money Market Accounts:
In my opinion its one of te best places to invest as its both a secure investment and has some of the highest interest of any savings account. The downside is that there is usually a minimum deposit and the higher your deposit the higher your interest will be. There are also several other limitations like the restrictions on withdrawals and its something you need to be careful of.

High Yield Saving Accounts:
These accounts offer some of the very best saving rates but you usually need a large deposit. Its a variation on Certified Deposits (CD's) and the only real other limitation is the withdrawals that are allowed.

Health Savings Accounts:
These types of accounts are intended to be used for medical emergencies and many people without private medical use them for potential emergencies. The main benefit is that up to $5000 is tax deductible but the downside is that you can only use withdrawals for medical expenses.

Retirement Saving Accounts:
These are designed specifically for retirement funds and have spuerb tax benefits that is well worth checking out. the limitation is that you can only withdraw from it at a certain age.

4 Reasons Why You Need a Savings Account

Savings accounts can help us in more ways than merely keeping money for a rainy day. Its a great investment vehicle and has a lot of useful purposes. In the long term it can be an important part of your wealth building strategy as compounded interest can really add up as you get older. The fact that its such a safe and secure investment makes it a much for everyone who is serious about their financial future. Lets look at some more specific applications of savings accounts and how you can use them.

1. College Funds
If you intend to send your kids to college then a 529 Savings Account is something you need to look into right away. The main benefit is that it does not get taxed and this alone makes it a worthwhile investments and a great way to pay for your children's education and help them get ahead in life.

2. Retirement
Saving for your retirement is something that you need to take very seriously. The days of big governments looking after you when you stop working is pretty much over and we all are now left to fend for ourselves. Retirement savings accounts are tax free which makes it very attractive but you can only withdraw from it once you reach a certain age.

3. Major Purchases
If you need to save up for some major purchase like a house or a car or maybe even a round the world holiday, then a savings account can help you immensely. Opening an account and setting up fixed monthly deductions to go into savings is a great way to start building on the nest egg that will help you buy "big things". Resist the temptation of using credit cards for thsi stuff - it will only cost you much more!

4. Emergency Funds
Financial experts like Suze Orman and Dave Ramsey recommend that you have an amount equivalent to 3 months of your earning saved up for emergencies. Very few people have this, but it really can provide a very important safety bet for you and your family. The best option is high interest accounts as you are unlikely to make regular withdrawals and the high interest and low risk makes it ideal.