To get ourselves in a savings mind-set for 2018, we are mastering a few saving account terms:
Savings refer to money being set aside for the purpose of future use. Savings generally have a shorter term goal in mind, but can also be used for longer term goals like saving for a deposit to buy a new home within the next three years or saving money for a child’s future university fees which might be many years away. The important characteristic of savings is that money is saved for a specific purpose like going on holiday or buying a new big-screen TV. Due to the shorter-term nature of savings; cash investments like call accounts, money markets, notice deposits or term deposits are usually the most appropriate investment products to use because these investments are less risky and more stable.
A call account is a bank account that has the advantages of both a savings and a checking account. There is no fixed deposit period; funds can be accessed immediately and it allows for unlimited withdrawals and deposits. A call account offers a higher interest rate than a normal bank account that is used for daily living and can easily be linked to such bank account.
A notice deposit is a type of savings account whereby the account holder is required to give notice that a withdrawal will be made within a certain period. The notice periods can vary between 7, 32 and 90 days and no penalties will be charged for withdrawing funds after proper notice of withdrawal was given. The funds will then be transferred to the account holder after the notice period. #FFLmasterfinances
A term deposit, also referred to as a fixed deposit, is an investment account held at a financial institution for a certain fixed term. The terms can vary from a few months to a few years and a fixed interest rate is usually offered. Interest rates offered are better than on normal bank accounts or call accounts, but the disadvantage is that funds can only be accessed at the end of the agreed term. #FFLmasterfinances
Download my FREE “12 Powerful Savings Tips” here, it will put you on your way to start saving money and building a better tomorrow.