Don't let idle money sit in bank savings account: Here's how you should invest instead

Investors often end up keeping funds idle in their bank savings accounts as crucial factors of liquidity and risk play on their minds. This deprives them of the ability to make their money work for them. Here are some smart ways to utilize idle funds lying in the bank accounts while ensuring liquidity and relatively low risk.

Sweep-in fixed deposit

Sweep-in fixed deposits automatically transfer surplus funds from a savings account to a fixed deposit, offering higher interest rates while maintaining liquidity. To set up a sweep-in facility, one can request it through the bank’s branch or via online banking. The bank links the savings account with a fixed deposit, ensuring that funds are available when needed.

Money market mutual fund

Money market mutual funds invest in short-term instruments, offering higher returns than savings accounts and easy redemption options. Research liquid funds online or consult a financial adviser for guidance. Investments can be conveniently made through fund websites or mobile apps.

Ultra-short-term debt fund

Ultra-short-term debt funds invest in instruments with maturities of up to one year, providing higher returns than savings accounts, with easy access to funds. These are ideal for those seeking a balance between returns and liquidity.

High-interest savings account

Some banks offer high-interest savings accounts, with competitive rates and unrestricted withdrawals. Compare offerings from different banks to find the account that best suits your needs.

Recurring deposit

Recurring deposits let you invest regularly, offering higher interest than savings accounts and keeping funds liquid. Open an RD at your bank’s branch or online, setting up auto debits from your savings account on a monthly or quarterly basis.

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