Cash at hand may sound good but it is not a good idea for several reasons. On one hand, it may not be safe and can be a hassle carrying it around but more importantly, it loses value with time – due to inflation. In short, if you are able to buy something for 100/- now, you may have to pay more for it next year. Inflation for January 2017 was 5.5% as per the Central Bank of Sri Lanka, therefore you need to grow your money by more than these levels to preserve the value of money.
Generally people are aware that they receive an interest on bank deposits, but at times they do not know how much they get. While current accounts pay no interest on the balance, savings accounts give a low interest around 3-4% pa normally but give flexibility on the amount and ability to withdraw at any time. There are specialized savings accounts by certain banks which provide higher rate of interest with few conditions.Fixed deposits are the next option with less flexibility in terms of withdrawal but they do offer an option to take a loan on deposit at any time if needed. Finance companies generally offer higher rates for than banks and even higher for senior citizens.
Let’s take a few options for an excess amount of 100,000/- at hand and what you can do with it.
- PABC Champion Saver – 5.50%
- DFCC Xtreme Saver – 6.50%
- Cargills Bank High Return Saver – 7.00%
- Cargills Bank 12 month FD – 13.00% pa
- Sampath Bank 13 month FD – 13.00% pa
- Sampath Bank 12 month FD – 12.00% pa
- DFCC 12 month FD – 12.00% pa
- Vallibel Finance 12 month FD – 12.50% pa
- Vallibel Finance 5 year FD – 13.50% pa monthly interest payment
Above rates are as at 8th February 2017 from the respective websites.
You can also consider investing in shares if you prefer. Equities tend to give better returns over long period of time although currently the Colombo Stock Exchange index has taken a beating during last few months. ASI index is 6093 as of 7th February 2017. Contact your stock broker for professional advise.