Basic Savings Question

[xxdanklutheranxx]

My wife and I want to start putting small amounts away for small vacations and for vehicle maintenance like annual vehicle services and so. We’re looking at FNB fixed saving accounts that gives an interest rate of ~3% and increases the longer you save. Keep in mind the savings plan is short term within 6-12 month period.

We want to know what’s the best savings plan:

1. Do we open one fixed savings account and send money to it monthly?
2. Is it better to have two separate savings accounts? So we separate monthly payments to each account for its own purpose?

Which of these two options gives the better savings return? The fixed savings accounts have no month account fees so I can open as many as I want as long as each has the minimum amount in it, which is R/N$100.00.

Any other savings options we can consider? We want to start end of this month. The vehicle money I’ll need by end Aug for its annual service and the vacation holiday will be needed towards end of the year but we will
Most likely push it to early next year instead.

 

[frknfly]

@xxdanklutheranxx I do something similar, but I use Tyme bank's Goal Save feature. You also get increasing interest the longer it's in there (starting at 6%), and some bonus interest if you give them 10 days notice before withdrawing. The 10 days notice is easy if you know when you'll need it, or just use a credit card and pay yourself back 10 days later.

I find it easiest to use separate accounts for each thing I'm saving for, since most of my items have different time periods. The only reason I can think of to put it all into one account, is that some banks offer higher interest for bigger amounts. But if you need to withdraw at different times I personally don't think that would be worth the hassle.

 

[mommabird]

@frknfly Great advice, I am using Tyme for all my short term savings

 

[howardmup]

@frknfly This is exactly what I do. Seems to work well for me so far. Plus it really is simple to open the account and set it up.

 

[babytoe]

@frknfly Based on what I’ve been seeing Tyme is the best option for now(they have a cap though).

I miss the days when banks use to give decent returns for hold accounts.. seems for the most part this isn’t the case(big 5 banks) except for Tyme.

Keep in mind you always want to beat inflation at a minimum which is +/- 3-5% (excl. currency fluctuations).

 

[latuwr]

@xxdanklutheranxx (Assuming you have a 32 day savings account)

If you see yourselves saving more than R20k in the next 6-12 months then you may want to save it together into a single account because from R20k onwards you earn more interest. Although the interest difference over a 6-12 month period on 20-30k is minute - so if the inconvenience outweighs potential earnings then rather keep the savings separate.

If you’re working with amounts of R100k or more - you have an option of money maximizer account that provides more interest than the 32 day savings account and does not require a notice period. But this account will cost you extra money, unless you have a private client account.

In conclusion - consolidate into a single account if you see yourselves moving up the interest bracket, and it does not inconvenience either party.

PS: I’m not affiliated with FNB. I’ve just been an FNB customer for more 15 years

 

[gracer]

@xxdanklutheranxx Tyme bank Is the best option. Unless you own a property. Then you just put extra cash into your home loan. More efficient

 

[resjudicata]

@xxdanklutheranxx Go with something that allows ease of access to you funds. You aren't going to get too much interest with those time frames. Maybe a longer term fixed would be better for the holiday savings.

 

[dassark]

@xxdanklutheranxx For things that particularly timed a Unit Trust would be a cheap option to beat inflation. You would ideally like to be in an income fund however the Interst rate spikes have hurt them as they are majority made up of bonds. Although, they are likely to recover with your timeline in mind.