Make your money work for you

The power of compound interest. : If you start saving now, over a longer period your savings will build up even more because you will earn interest on your interest. Over a long time it can make a big difference.


Why worry about saving?

Living from one payday to the next can be stressful. Having some money set aside can reduce your worries and help you deal with large bills or unexpected expenses. As your savings grow you won’t have to reach for your credit card as often and your savings will earn interest for you.

If you stick at it, you can achieve bigger goals such as buying a car, having a deposit on a home or paying off your home early.

How to get started

The secret to successful saving is simple: start now. You could start by setting up an automatic deduction from your pay or transaction account so that you won’t forget to put it away.

If you’re not sure how much you can save, see Know where your money goes.
Otherwise, you could start by setting aside part of your weekly income into a separate savings account. It doesn’t have to be a large amount.

If you leave your savings to grow, you’ll get the benefit of compound interest. This is where you earn interest on the amount you’ve deposited, as well as on interest you’ve already accumulated.

Even if you only contribute a small amount, your savings can really build up over time.

Tips to help you save

Start now, no matter how small your savings.

Pay yourself first – deduct savings from your pay automatically.

Put your savings in a separate account that doesn’t have ATM access.

Try to save any pay rises, bonuses or tax refunds.


It helps to have a plan or goals for your savings. This gives you an idea of how much you need to save and it helps keep you focused on the end result, particularly when you’re tempted to spend. You could set a small goal first and then build up to saving larger amounts.

Where can I save?

There are lots of options. Some people like to save in accounts that lock your money away for a while, like bank fixed term deposits. There are also a good range of
Indian postal savings schemes.

Tips to find the best account for you

Choose an account that pays the best interest rate for your needs.

If you think you’ll be tempted to withdraw it, put your savings into an account that’s harder to access.

Compare fees and other charges.


Investing your money

You don’t need to have lots of money to invest – it’s all about making your money work harder.

Some people start with a small amount of savings they’ve built up, while others invest regular amounts. The trick is to start and then keep adding to your investments as you can.

Don’t put all your eggs in one basket

You might worry that investing is risky. In general, the higher the earnings or return you expect from an investment, the more risky it will be. Investments that offer lower returns are generally less risky.

You can reduce your risk by spreading your money around and investing in different types of investments – this is called diversification. This is a good way to help protect your money, as it’s unlikely that all your investments will perform badly at the same time.

What can I invest in?

There are lots of different investments to choose from. The four main areas – also known as asset classes – are shares / mutual funds, property, bonds and cash.

You can invest in some of these asset classes directly (such as by buying shares, buying mutual fund units or starting a term deposit). Others can be indirect – for example, where you buy shares or property through a managed fund. With a managed fund, your money is pooled with that of other investors and invested on your behalf.


The right investment for you will depend on a number of things. Ask yourself:

How long do I want to invest for?

Do I want an investment that can be sold quickly if necessary?

What level of risk am I comfortable with, and what can I afford?

What’s my plan? What do I want to achieve from my investments?

If you need your money for emergencies and don’t want to lock it away for a long time, you might want to choose investments that can be cashed in easily, like a higher interest savings account. If you’re willing to invest for a longer period you might choose property or shares, where values may fluctuate more but the returns are generally larger.

If you’re new to investing, you can learn more by reading financial books, magazines and newspapers. You can also get financial advice to help you to choose the best investments for your situation.

Watch out for investments that promise returns that sound too good to be true. It could be a scam and you could risk losing your money.

Fees, charges and taxes

Most investments have fees, charges or other costs and they’re not always obvious. Make sure you do your homework on fees and charges before making an investment, as these costs can really have an impact on the size of your nest egg.

Your investments may also be taxable. Make sure you understand the tax effects of your investments. Talk to a registered tax agent if you’re unsure.