Finding the right place to store your cash can be overwhelming. There are many ways in which Australians can make their money grow. Picking an account requires self-awareness about your own habits, timeline, and overall financial aspirations. It should allow you to use your funds whenever necessary while earning maximum interest during any period where you are not using it.
Types of Savings Accounts
High Yield Savings Accounts (HYSAs)
For people who are seeking fast returns, high yield savings accounts from the likes of ING Bank are a good idea. Such accounts earn higher interest rates than others. They are recommended in cases where your funds need to increase in time and still be easily accessed – which makes them perfect for emergency funds.
Traditional Savings Accounts
Traditional savings accounts represent the easiest way to enter into banking. Lower interest rates are what you can expect here. The benefit of such accounts is complete convenience and the ability to easily access your funds. They are useful for temporarily storing your money until the time when you will need it.
Money Market Accounts (MMAs)
Such accounts are similar to checking accounts in the sense that you receive a debit card and a check from your bank. At the same time, they provide better rates than regular checking accounts. People who like keeping higher balances may benefit from this type of account.
Certificates of Deposits (CDs)
In Australia, such certificates are called term deposits. To earn a fixed interest rate from the bank, one has to deposit their money for a predetermined amount of time. This is a great option for people who received a lump-sum payment or other windfalls.
Specialised Savings Accounts
Sometimes financial planning requires special measures. For example, if someone plans to pay for health insurance or college education in the near future, it would be better to use HSAs or ESAs to accumulate necessary finances faster.
Matching Savings Account to Your Lifestyle
Choosing the right savings account depends on a number of aspects, namely: your goals, your funds’ liquidity, risk tolerance, and time frame. Each of them defines different strategies.
Young Professional Saving Up for a New House
If a young professional aims at buying their first house in the nearest future, HYSAs and CDs are a good idea. With such accounts, you can accumulate capital quickly and earn additional interest to cover that expensive housing deposit.
Parents Saving up for College
People who wish to put their children through college will need more time to save. Specialised education accounts or a series of CDs allow parents to safely compound interest over a decade or more and be fully prepared once the kid enters the university.
Retiree Planning Emergency Fund
Retirees prefer to have absolute security and liquidity, which means that both traditional savings account and MMAs should be used. The former will take care of daily expenses while the latter will help you handle any emergency that might occur.
Let Your Money Work for You
Examine your financial situation at the present moment and evaluate future life changes. Moving your cash into the proper account based on your unique circumstances will bring you a lot of passive revenue in the coming years. Spend some time doing research this week to create an account that will serve you in the future!
