What’s So Special About Special Savings?
Think about that emergency fund that you have set up for the past few months. We’ve let it idle in a savings account and it’s reached quite a substantial amount already. Isn’t it time we do something about it?
But first, we need to think of how we intend to use this fund. First, is this an amount that we are willing to risk? Since this is your emergency fund and emergencies can happen any time, we don’t want to risk losing money in the short-term for long-term gains. We want to lock in the value of this money. Second, are we going to need this money anytime soon? Can we lock this money in an investment account and wait for it to grow? Again, since emergencies can happen any time, we want this fund to be as liquid and as accessible as possible. So what can we do with this fund so that it won’t have to do with the measly earnings from a regular savings account?
This is where special savings accounts come in. What exactly makes a savings account a special one.
Special savings account, as the name implies, has special characteristics that are a variant of regular savings account. The main come on of special savings is it’s tiered interest rates. In finance, when you encounter the word tiered describing a product, it means that the interest rate changes according to the amount of money you have put into the account or the product. In the case of a special savings account, your deposit will earn more interest if you deposit more.
Another variation of special savings accounts is that you only have a minimum number of withdrawals allowed per account per month, this usually ranges from once a month to four times a month. This can be a benefit or disadvantage depending on your perspective. For me, this is beneficial because it hinders you from making a withdrawal every now and then, but at the same time, it allows you to withdraw the money in case of an emergency.
Additionally, since special savings accounts are still considered as deposits, you can rest assured that the Philippine Deposit Insurance Corporation (PDIC) will assure the amount of money you have deposited up to 500,000 pesos. Most investments don’t really carry any guarantee.
So if you think you’re ready to invest and you think that this would be something that you’d be willing to start with, tune in tomorrow as we explore some products in the market that offer special savings or special deposit products.