If there’s one thing most people in India have in common it’s this: they all have a savings account to park their money in. While the smarter among them invest money for their long-term requirements in inflation-beating mutual funds, many of them keep money for their short-term needs – like saving for a vacation, buying an expensive new electronic gadget etc. – in their good old savings account.
This despite the fact that the interest on savings accounts is often much lower than inflation (the rate of increase in commodity prices).
The chief reason is the convenience they offer. Savings accounts come with a debit card which can be used to withdraw cash at ATMs or to make payments at stores/ online and you can use this money instantly. So, even though debt mutual funds offer better returns, the lack of these features make them less attractive in some people’s eyes.
But what if you could get the higher returns offered by mutual funds, while still enjoying the convenience of your savings account? Now you can! Our new Super Savings Account offers you just that.
What is a Super Savings Account?
FundsIndia’s Super Savings Account is a new-age mutual fund scheme that offers you the benefits of a savings account. It gives you both, the higher returns offered by debt mutual funds and the convenience of your bank account.
What makes this different from regular liquid mutual funds, is that you can get an ATM+Debit card. Using this card you’ll be able to withdraw (redeem) cash and make purchases at Visa enabled retailed outlets, at any time on any day of the week! Also, this fund has no minimum balance.
How does it work?
The money you put into your Super Savings Account is invested in the Reliance Liquid Fund – Treasury Plan. You can add funds to this account at any point of time. This money will then stay invested in this fund until you withdraw it.
If you opt to get the Any Time Money card, you’ll be able to withdraw your money, or use that card to make payments instantly – just like you would with your normal savings account card*.
You won’t be charged any account opening or maintenance fees and can start off your investments with as little as Rs. 1,000! Do note: currently, you can only invest lump sum amounts in the Super Savings Account.
Why should you consider using it?
Savings accounts, while relatively safer than mutual funds, offer very low returns. Currently, most banks’ offer interest rates of 3.5% for savings accounts. Meanwhile, the average rate of inflation is currently at 3.22% (one year’s inflation from September 2016 month to September 2017). What’s more, if you earn more than Rs. 10,000 on your savings, you’ll need to pay tax at your slab rate on the excess amount.
On the other hand, your Super Savings Account has the potential to offer you much higher returns on your investment – it’s one-year return was 6.72% as of October 26, 2017. So, by investing in the Super Savings Account, you’ll be able to save and earn at the same time!
Of course, as your money is being put in a debt mutual fund, the capital gains you make on your investments in the Super Savings Account, if held for less than three years, will be taxed at your slab rate (you can learn more about taxation of mutual funds here and here). However, if you hold your investments here for more than three years, you will get to enjoy indexation benefits.
How should you consider using this account?
Keeping all this in mind, here are a few ways in which you can consider using the Super Savings Account:
To create an emergency fund which can be withdrawn at any time
To temporarily park any lump sum you may receive
To save for short-term goals such as saving for an impending vacation or other short-term obligations
To park money and systematically invest in other high yielding schemes such as equity funds
We would recommend splitting your savings into two parts – one for your day-to-day needs and the rest for your emergency fund or any of the other purposes listed above. You can keep the first part in your savings account and put the rest in your Super Savings Account.
This way, you’ll be able to give your money a welcome boost without missing out on the convenience of your savings account.
* Maximum amount applicable for Instant Redemption Facility will be up to Rs. 50,000; or 90% for folios without Any Time Money card (50% for folios with Any Time Money card) of the Clear Current Value of investments. Conditions Apply. Mutual funds are subject to market risks. Past performance is not indicative of future returns. Please read all scheme related documents carefully before investing.