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Tags: finance, personal finance, advanatges of passbook savings account
 Before the rise of various investment vehicles in the market, banks have long been offering to people the wonders of opening a savings account. Most often, people deposit their money in banks for security purposes. The amount they save for a month goes directly to the bank account. This method of saving up has been very popular even up to now.
Majority have various accounts with different banks. The best thing about it is the way it teaches people to save up even with just a minimal amount. Even though money market savings account and certificates of deposits are becoming popular among investors, there are still some who believe in the power of passbook savings account.
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If you are the type of person who is looking for safety of your money, opening an account with a bank is a good thing you can do. You can actually save up for anything. But just a little reminder though, try to make it a point to save an amount which is just equal to the insurance provided by Federal Deposit Insurance Corporation which is up to $100,000.
That’s why it is advisable to distribute your money in excess of $100,000 to another bank, the amount still should not exceed $100,000. This procedure is often safe especially during this time of recession. A passbook savings account is even better for those who are just starting to save for their future.
Actually, if you have kids who are teenagers, you can teach them regarding financial responsibility by opening accounts of their own. You can tell them to deposit their extra money to their accounts. The only drawback of a passbook savings account is the lower interest income you will be receiving, unlike some other investment schemes where investors will surely reap big profits.
However, the good thing is the liquidity of the accounts. If you need money in case of emergencies, you can right away withdraw the amount you need. You can just go to the bank and fill up the withdrawal form. Liquidity is really one of the advantages of passbook savings account.
Another advantage is the safety aspect. Because banks are trusted in the financial world, you won’t be worrying of anyone getting your money. If you will just keep your money at home, there will chances of theft or robbery. To avoid those situations, depositing your money at banks is one good option for you.
Even though there is a rise of modern banking experience like the presence of ATMs, some people still prefer the traditional way which is a passbook savings account. But you must remember an important factor in passbook savings account which is inflation. Because it yields a very low interest, sometimes it cannot cope up with the rate of inflation.
The average yield is actually just .05 %. But when you’re just starting, I still recommend this traditional way for safe-keeping purposes. Once your money has grown into a much higher amount, investment to other financial instruments can now be possible. It’s really a good idea to save not just for today for the years to come.
About the author
The author of this article Rick Goldfeller is a successful underground Financial Analyst who has been advising and coaching individuals for many years. Rick recently published a book on how to manage your money and attract Wealth and Financial Freedom. More info on his Finance Planning course is available HERE.
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