Saving accounts
The savings account is an interest-bearing deposit account that pays a modest interest rate; their safety and reliability make it a great opinion to park your money. With an easily accessible fund, saving accounts pay you interest, and you can withdraw an unlimited amount from here. The interest earned from saving accounts is the taxable income i.e, the one upon which the ch income tax system imposes es tax. Savings accounts are tones used for loans, and the interest rates provided by the saving banks vary as banks and credit unions can change their rate anytime. Some savings accounts require a minimum balance to avoid monthly fees, whereas some don’t need any balance.
Advantages of Saving Account are as follows:-
- It is easy to be opened
- It has the potential to earn interest
- It keeps your money safe
- It provides liquidity and the facility of bill payments
- It provides easy, and good access as your funds are readily available
Disadvantages of Saving Account are as follows:-
- They have lower interest than other accounts
- There is a federal limit on saving withdrawal
- There is a requirement of minimal balance
- The interest is compounded monthly or even annually
- Some institutions also charge fees for the saving accounts
Bonds
Bonds are the debt-security where the issuer holds debt and is obliged to pay the principal amount on the maturity rate. Bonds are liquid and hence considered as safe investments. A bond is an instrument of indebtedness to the holder under which the issuer owes the holders. The bonds of fixed rates are subjected to interest rate risks, credit risk, event risk, yield curve risk and much more. Bonds are used by companies, states, municipalities, and sovereign governments and could be considered an IOU between the lender and the borrower. Bonds are issued by the government, and corporations are used for borrowing money to fund roads, dams, schools, and much more for the welfare of the citizens.
Advantages of Bonds are as follows:-
- The volatility of bonds is lower than that of other investment options
- Bonds are the safer investment option
- Bonds are attractive and provide a fixed interest amount.
- Bondholders could enjoy legal protection
- Bonds are of many varieties hence, one could experience investing in the favorable variety of bond
Disadvantages of bonds are as follows:-
- Bonds are the subject of risks
- Sometimes the price of bonds can become volatile
- The bondholders could lose all their money if in case the company goes bankrupt
- There is no guarantee the repayment amount
- Bonds yield lower rate of interest than other investment options.
Saving Account v/s Bonds
Saving accounts and bonds, both are good ways that could help you make your money work for you. Savings accounts are well suited for the money you need to access quickly, and bonds are suitable when you need a high rate of returns. Both saving accounts and bonds are very safe places to keep your money, and you could choose anyone according to your needs. Avenging accounts are well suited if you want easy assess to your money low-risk and short-term savings, but if talking about bonds, then bonds are the best option for your money as they keep your money more secure and are ideal for low-risk with long-term savings.
Using both saving accounts and bonds for more savings
As we know, both saving accounts and bonds are safe investment options hence, you could try using both options for your saving goals. You could use both these options to earn a lot of money as saving accounts can enclose money and are also very liquid, even you could take your money back any time. This makes the saving account a perfect place to store the emergency funds as the bank returns them to you whenever you n them indeed. Saving an account offers less interest rate than bonds but provides you with quick access to cash and lets you avoid debt; hence, you could earn a high rate of interest from bonds and use a saving account for an emergency fund. With the different features and strategies of bonds and saving accounts, you could make a great amount of money for your future.
