By News18
Leaving money untouched in a savings account in 2025 is like storing ice under the scorching sun鈥攊t鈥檚 disappearing fast, warns Chartered Accountant Nitin Kaushik.
鈥淧eople often say, 鈥楢t least my money is safe in the bank,鈥欌 Kaushik explains. 鈥淏ut if it鈥檚 not growing, it鈥檚 shrinking. What feels like safety is actually slow financial erosion.鈥
For many Indian savers, keeping surplus funds in a savings account feels secure and familiar. But financial planners caution that this comfort comes at a steep, invisible cost鈥攍ow interest rates combined with inflation steadily reduce the real value of your money.
Interest rates on savings accounts remain unimpressive. State Bank of India (SBI) offers just 2.5%, while private sector banks like HDFC, ICICI, and Axis offer around 2.75%. Even IDFC First Bank, one of the more aggressive players, caps at 3%.
鈥淵our Rs 1 lakh fetches you less than the cost of a plate of pani puri each month,鈥 Kaushik says bluntly. 鈥淭hat鈥檚 not saving鈥攊t鈥檚 slow financial self-sabotage.鈥
Keeping money in a savings account in 2025 is like storing ice in the sun ?
It鈥檚 melting. Quietly.
Let鈥檚 decode the hidden losses of your 鈥渟afe鈥 savings ?#stockmarketscrash #finance #nifty #investingtips pic.twitter.com/e0JzDKOjzu
鈥 CA Nitin Kaushik (@Finance_Bareek) July 3, 2025
Inflation Is The Silent Killer
At an average inflation rate of 5鈥6%, your money鈥檚 purchasing power steadily declines. 鈥淚f you earn 2.7% and inflation erodes 6%, you鈥檙e losing value every day,鈥 Kaushik notes. 鈥淵our Rs 100 today is worth just Rs 94 next year.鈥
Idle Money = Missed Opportunity
Kaushik compares idle cash to an unproductive employee. 鈥淲ould you pay someone to sit idle all day? Then why let your money do nothing? It should be hustling鈥攚orking to create more wealth.鈥
He advises keeping only 3 to 6 months of essential expenses in a savings account for emergencies. Any excess should be moved to higher-yielding, low-risk alternatives.
Smarter Alternatives to Savings Accounts
For conservative investors wary of market swings, several instruments offer better returns than savings accounts, without excessive risk:
Liquid Mutual Funds: With average one-year returns of 6.92%, these are tax-efficient and easily accessible.
Overnight Funds: Ideal for parking funds for a few days; they delivered around 6.33% in the past year.
Short-Term Debt Funds: Offer better yields than liquid funds with stable returns.
RBI Floating Rate Bonds: Government-backed and relatively safe.
Fixed Deposits: Still viable for ultra-conservative investors, though returns are moderate.
鈥淚t鈥檚 not about the amount you start with鈥攊t鈥檚 about consistency,鈥 Kaushik advises. 鈥淓ven Rs 500 invested regularly can snowball into significant gains over time.鈥
Liquid funds are particularly strong alternatives to savings accounts. They invest in high-quality debt instruments maturing within 91 days, making them low-risk and suitable for short-term needs.
These funds require no minimum balance and offer easy redemptions. Withdrawals requested before 3:30 pm are typically processed by 10 am the next business day. For requests made on Fridays, funds are credited on Monday.
They suit investors with holding periods from seven days to three months. However, withdrawals before seven days may incur a small exit load ranging from 0.0070% to 0.0045%.
鈥淏ank savings are safe, but slow,鈥 Kaushik concludes. 鈥淚nflation is the real thief. Don鈥檛 let your cash sit idle鈥攑ut it to work.鈥
In 2025, effective financial planning means moving beyond the false comfort of savings accounts and actively seeking better ways to preserve and grow your money. Even small investments, when made wisely and consistently, can unlock long-term financial security.