Why your money shouldn’t just stay in your cheque account

Your cheque account is designed to make it easy and convenient to make purchases and pay bills, and it plays an important part in staying within budget. Plus, having a large amount in your cheque account is a great feeling. However, it isn’t the best place to save your money because it doesn’t allow it to grow.

Let's explore why your cheque account shouldn't be your money's permanent residence and discover 3 better places to help it grow.

Why your cheque account isn't enough

• Inflation nibbles away at the purchasing power of your money. If your savings aren't growing at a rate that outpaces inflation, you're effectively losing money over time.
• Cheque accounts typically offer lower interest rates than what you could earn through other investment solutions. By leaving your money sitting idle, you're missing out on potential growth.

3 Smart alternatives to supercharge your savings

High-yield savings accounts

• How they work: These accounts function similarly to traditional savings accounts but offer competitive and significantly higher interest rates than cheque accounts.
• Benefits: A great starting point for beginners, offering liquidity (easy access to your money) and a better return than your cheque account.

Money market accounts

• How they work: These accounts provide higher interest rates based on market conditions. The interest earned is usually calculated daily and paid out monthly. However, there are often minimum account balance requirements to open an account or keep earning interest.  
• Benefits: Slightly higher potential returns compared to high-yield savings accounts, while still maintaining a relatively low-risk profile.

Brokerage accounts

• How they work: These accounts allow you to invest in a wider range of assets, including stocks, bonds, mutual funds and exchange-traded funds (ETF). There are various options that cater for both beginner and experienced investors.  
• Benefits: Potential for higher returns over the long term, allowing you to benefit from the growth of the stock market and other investment opportunities.

NOTE: investments can exponentially grow your money, but they don’t offer any capital guarantee. It’s essential to remember that investments come with inherent risks, and it's crucial to do your research or consult a financial advisor before making any decisions.

Choosing an option that makes your money work for you

The right place to grow your money will depend on your individual needs, your financial goals and your timeline for growing your money (i.e. when you need it). Here is a rough guide for choosing a savings vehicle that could serve your needs:

• Short-term goals (less than 2 years): High-yield savings accounts are a good option for emergency funds or saving for a downpayment because they let you grow your money but also offer liquidity and access to your funds.
• Medium-term goals (2–5 years): Money market accounts can be suitable for goals such as a car purchase or a dream vacation. Giving it more time will give it room to grow.
• Long-term goals (5+ years): Consider a brokerage account to invest in the stock market and benefit from potential long-term growth, especially for retirement planning.

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_{Disclaimer: This article is solely intended for information. It does not constitute financial, tax or investment advice or recommendation. Please speak to a financial advisor or registered financial professional before making any financial decision(s).}

_{Standard Bank, its subsidiaries or holding company, or any subsidiary of the holding company and all of its subsidiaries make no warranties or representations (implied or otherwise) as to the accuracy, completeness or fitness for purpose of the information provided in this article or that it is free from errors or omissions.}