Types of Investments : Saving Accounts

Saving Accounts Basics :


Saving account?an investment? (O.O)?


Yes, saving account is also consider a type of investment.


Many institutions (banks especially) offer more than one type of savings account (for example, passbook savings, gold investment savings, statement savings and etc..). 


Upon opening a passbook savings account, you will receive a record book in which your deposits and withdrawals are entered to keep track of transactions on your account; 


*This record book must be presented when you make deposits and withdrawals. (except for passbook-less saving accounts which is popular these days--to reduce paper usage for environmental protection)


Savings accounts at federally insured depository institutions are protected by federal deposit insurance, FDIC. 


Generally, the government protects the money you have on deposit to a limit of RM100,000.


Account features and fees vary from one institution to the next thus, it's important to look closely and compare features. Here are some of the most common features to consider for comparison:


Fees :


Will you have to pay a flat monthly fee?
for current account for example, some bank charge a certain fees for the account itself; usually twice every year (six month-six month).


Secondly,will you pay a fee if the balance in your account drops below a specified amount? Is there a charge for each deposit and withdrawal you make? If you can use ATMs with your account, is there a charge for this service? Are fees reduced if you have other accounts at the institution? 


Interest Rate :


What is the interest rate? Can the institution change the rate after you open the account? Does the institution pay different levels of interest depending on the amount of your account balance, and, if so, in what way is interest calculated?


Interest Compounding :


This is the most crucial feature that needs to be accounted for in selecting saving account that suits you. 


How often is interest compounded? Daily? Monthly?


As well as how often they pay interest?monthly?twice a year?yearly?


*Note that the duration of the calculation of compounded interest is not the same as the interest pay out time.