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Making that savings decision
In managing one ’ s personal economy , there are three major components to take note of : consumption , savings and investments .
Consumption is what we know how to do best . But we also envision a good retirement ; a retirement that will not expire in just a few years . The most important step in getting ready for a splendid retirement is earning regular income . What one does with that income determines one ’ s quality of life when he withdraws from employment at the golden age . Apart from consuming , he must put something aside to tide him over for the years that he will no longer earn income . But the argument is almost always made : “ My take home cannot take me home .” It doesn ’ t matter – little drops can make an ocean .
Let ’ s assume one earns N80,000 and saves N5,000 every month in a savings account at 3 % per annum . It means that every month , one earns a simple interest of N12.50 . That may seem little but wait for the magic . Let ’ s add another N5,000 in the second month at the same rate . Should the interest be N12.50 ? Nope . This is when compounding kicks in . Remember that N5,000 has been saved in the first month . Add to that N12.50 . What you then had as your balance going into the second month is N5012.50 . At the end of the second month , you ’ ve added another N5,000 which now makes the principal N10,012.50 . The interest will then be N25.03 . If one carries this on for twelve months consecutively he stands to save N60,000 principal and earn N6,148.95 in interest payments . If one carries this on for five years without breaking , he would have a balance of N324,041.65 . This represents N300,000 in principal savings and N24,041.65 in accumulated interest . Let ’ s say one started saving at the age of 25 when he started working , his savings at the time he retires at 65 would come to N4,641,873.25 .
It is not a substantial much going by all the issues related to inflation but it is enough proceeds to go to the next stage of the individual economic process which is investment but the focus of this discourse is individual savings . In reality , most banks may not give you the benefit of very attractive savings rates . Therefore , it is important to look out for the most lucrative savings rates offered by the various banks . We can ’ t examine all the savings packages on off but will attempt to look at a few that have published information on their savings packages . They are a snapshot . You will still have to negotiate with the relationship officer of your chosen bank .
Access Bank - Target Savings Account 5 % interest paid quarterly Diamond Bank – High Interest Deposit Account ( HIDA ) Account Interest rates per annum are earned on available balances payable monthly .
• Less than ₦ 100,000 – 2 % p . a .
• 100,000 – 499,999 – 3.5 % p . a .
• 500,000 – 999,999 – 3.75 % p . a .
• 1 million and above – 4.0 % p . a . Ecobank – Premium Savings Account It boasts “ extremely attractive interest rates ”. Fidelity Bank – High Yield Savings Account ( HYSA ) It boasts zero balance interest rate as high as 5 % with extra 1 % bonus interest if withdrawals are not made in six months . FCMB – Premium Savings Account It offers a savings account Interest rate of 3.3 % per annum . No minimum balance is required . However , If the daily balance falls below N100,000.00 , interest rate reverts to savings rate of 3.3 % p . a . If withdrawals exceed 3 times in a month , interest will be forfeited for the entire month . First Bank - First Savings Plus Normal savings interest rate of 3.6 % p . a . GTBank – GT Max
• GTMax Silver - 2 %
• GTMax Gold - 2.75
• GTMax Platinum - 3 % Heritage Bank – HB Plus
The bank announces that “ this is a High-Yield Hybrid Savings Account ” with features of a current account with bonus interest . It pays 1 % bonus on normal interest rate Keystone Bank – Quicksave Plus It pays the normal savings interest rate of 3.6 % p . a . Skye Bank – Skye Wise Monthly Interest paid on account balances ( 1 % above normal savings interest rate ). Stanbic IBTC – Savings Account It boasts interest “ at highly competitive rates ”. Standard Chartered – eSaver Account The bank says one can “ earn up to 5 % interest with an eSaver account ”. Sterling Bank – Classic Savings Account It boasts “ competitive interest rates ”.
Union Bank – UnionGoal The UnionGoal account is a goal-oriented savings account that allows one to achieve a Million naira target through a simple structured savings plan . If one starts saving from as little as N15,000 monthly he can earn up to 7.3 % interest p . a . on his savings . UBA – UBA Savings Account Very little information on interest rates but boasts attractive interest rates . Unity Bank – Target Savings Account It is an interest bearing account Wema Bank – SmartSave Account It boasts “ competitive interest rates ”. Zenith Bank – EasySave Premium Account One earns interest rate as much as 3.6 %
4 invests . ng - MARCH / APRIL 2017