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Managing the Money
keeping a close eye on personal finance

Another account to look for is the one that pays even more interest to customers who make regular minimum deposits during each month. These target or goal-saver accounts can vary, but for most that we've researched, the monthly figure is $200. As long as no less than this goes in every month - more can be deposited if desired - the current declared interest rate will be paid on the total in the account. After a couple of months of paying this in over the counter, it might be worth setting up an automatic periodic transfer to save time. An occasional check will ensure the strategy is succeeding. Certainly, organising different accounts in this way takes time and a little thought, and many might consider it not worth the bother; but it doesn't take a financial genius to work out that $500 at 1.65% per annum is preferable to $1,000 at 0.45% p.a. And don't forget - this interest is compound; in other words, interest continues to be paid on interest earned. Just remember that interest rates are quoted per annum, so 12% pa equates to 1% per month; but as this may be calculated daily and paid monthly or quarterly into the account, next time interest is paid you will be receiving it on both the principle AND any interest earned to date.

With a decent savings plan, there may come a time when the working account has just enough in it to tick over comfortably; the better-interest, overflow account is healthy and transferring the necessary into the higher-interest one without a problem; and that, as a consequence, is really mounting up. Here's the time to be greedy. Term deposits are a way of gaining even more, as long as the surplus funds used to open them aren't needed for a while. Once again, they vary with respect to minimum amounts and the length of the term that the cash is tied up. Interest rates for different periods reflect economic trends, so rates for long term investments - say 3 years - are likely to be relatively low because banks don't like to predict too far ahead. Plus, from the investor's point of view, tying up a large sum for years may not be practical. Here's where the shorter term deposits can work well. The banks are prepared to offer interest rates higher than the normal accounts for sums deposited for periods of 3, 4, 6, or 9 months, etc; the better rates often being at the lower end of this scale. The beauty of these short-term investments is that the interest rate is fixed, so what you are offered is what you get, irrespective of fluctuating economic trends. At the end of the period, the investment can be cashed out by the customer; rolled over for the same period at whatever the new rate is at that time; or reinvested for a different period paying a better rate.

In order to continue benefitting from the strategies mentioned, regular checks of current banking trends are necessary to keep up to speed. This also applies as much, if not more so, to superannuation and pension schemes which tend to be forgotten until close to the day that they are needed. It is folly to rely solely on the managers of these long-term investments to do the right thing by customers all the time. Just look back at what happened after the global financial crisis: individual retirement funds lost thousands over quite a short period, simply because clients accepted the advice of "the experts" to sit tight and wait for things to improve. They eventually did; but by then, a considerable percentage of the totals had vanished. Bear in mind, this is your money and you have every right to choose where and how it is invested. Look at all the options, the types of funds, the interest each pays; and, not least, the risks each one carries. Sometimes, especially during times of economic uncertainty, it is better to transfer money to a lesser-paying, safer fund, if only for a limited period. Then, once the situation improves, shift it to a more-profitable option. You can even consider moving the lot to a different Company altogether - if that is possible under the terms of your contract, I'd advise you to exercise it when appropriate.

The banks and financial institutions, you see, love taking your money, but they aren't keen on handing it back. They don't, however, rule your life; and it is your decision alone which mattress you stuff your money in.

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