How to Manage Your Savings as Interest Rates Fall and Rise

This is a time when we are surrounded by chaos and calamity amidst the Covid-19 breakout. Life has taken a hit and our finances seem to be falling apart. However, you must not panic about your finances and savings. The world economic markets have been spooked and the interest rates have fallen to steep levels. If you are one who has invested your funds in different high-yielding accounts, you may be especially worried by the growing drop. However, there are several ways that you can use to keep you funds healthy even during this period.

Here are some of the best west through which you can manage your savings amidst the rise and fall of the interest rate:

Maintain some liquidity – Liquid finances are those that can be easily accessed in times of need. While this money can be also used to serve any emergencies during the pandemic, it also helps your finances stay on track. Reserve some amount of money in your savings account or checking account. This must include the money that you do not put into lock-in accounts. While the returns on this may not be as much as you would like, the funds can be immediately moved to any environment where the interest-rates on the rise.

Learn your investing instincts – If you are an investor who prefers watching your money stay unaffected by the constant market falls, keep your money in a savings account. The interest rates do not fluctuate as much. On the other hand, if you are comfortable with the great drops while awaiting better yield, you can invest in market bonds and shares.

Fixed deposit laddering – A good way to make the best of the interest rates is through fixed deposit laddering. The concept has caught up with a growing number of investors. It essentially means investing in fixed deposits as per a schedule. You can invest INR 10,000 for a period of one year in the current month, followed by another INR 10,000 for a period of one year in the next month. This way, your payouts too are scheduled and you can balance your returns even through the fluctuating interest rates.

It is important to know that the interest rates on the market are bound to fall and rise with different changes. But you must not scramble to make adjustments with every alteration in rate.  This behavior can back fire over time. Do keep track of the market fluctuations but do not take impulsive decisions.

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