Basics for savings

Time is the key factor of personal savings. It isn't always simple to plan, as things always change. In example, purchasing a home, paying off student loans, planning retirement, visiting a beautiful destination or buying a car. All of these activities require smart planning and substantial financial means.

The one question you should be asking before deciding on personal savings is for how long can I afford to deposit my money in a bank? Think carefully on when you might need it back.

Most of the banks offer three types of term deposits: short-term, mid-term and long-term deposits.

Short-term savings

A type of personal savings designed for achieving smaller goals, such as saving for a vehicle down payment. These deposits are focused on a one year period. The banks vary interest rates depening on the amount of savings deposit and maturity period, usually arranged for one month, three months, 6 months and 12 months. The majority of the short term deposits is automatically renewed if they haven't been withdrawn. Consider matching the maturity to the timeframe in which you want to make the desired purchase.

Mid-term savings

In addition to the short-term savings options, maturity of a term deposit can be two or three years. Such mid-term deposits can give you a considerable rate of return with relatively low risk, and potentially increase in value the longer your money is saved.

Long-term savings

When you save money in a period of four, five or more years, it is considered a long-term deposit. Most of the people choose such maturity span because they want to ensure life’s goals such as retirement. Personal savings can be started from the moment you graduate from college, or even before that. A good rule of thumb is to have a higher ratio of variable savings interest rates when you’re younger and then increase the percentage of fixed savings as you age.