Is The Current Savings Market Like Playing a Lottery?
English: ceramic piggy bank (Photo credit: Wikipedia)
Banks and building societies provide considerably average deposit interest rates. On a national scale and remotely distributed banks and building societies also offered above-average rates of interest. Recent studies said that in spite of the current economic situation the savings market remained a stable one.
There has been a lot of unpredictability over the last year but the significant change in the savings market was unexpected since it was steady over a long period of time.The conclusion signifies that natural feature is one of various factors which manipulate the setting rate of interest by banks.
Regionally and nationally operating banks take on diverse business models and perform distinctly in the deposit market. Savers should check the interest rates on a regular basis and maybe considered inaccessible accounts if they are looking for higher rates.
Regionally based building societies and banks have been far more dependent on deposits to subsidize other aspects of their banking business, such as provision of loans, than nationally based banks, which had better access to money market funds. While greater national banks contend with each other, they are less likely to do so with minor regional banks or building societies.
These regional differences were recognized by taking into account of the various banks and building society branch networks while no one bank has absolute national branch coverage. A bank or building society is generally defined as regionally based, if 75% of their branches are situated in one region. A nationally based bank is defined as having more than 50% of their branches in three or more regions. Banks that only undertake remote allocation using the phone, internet or postal system are considered individually.
Certainly, India remains as one of the very few long-standing stories of sustainable growth in the world. This long-standing growth story of India is unbroken with its constructive demographics and growth of income. The activities of the stock markets are not always administered by long term factors and in the short term,equity markets are likely to be volatile and this is subsequently a major factor of current concern.
The famous saying that “fools generally invest in lottery”, is not always true. A risk lover always has a tendency to gamble. If he wins the gamble, the income from it is always breathtaking. The opposite is the case for the risk averse folks.
The current savings rate picture may not be an attractive one but the allure for prizes and gifts, especially cash prizes, can subdue consumer indifference to savings. This is the famous “lottery effect”. The social market foundation analysis shows the customary approach to savings strategy – that is, it turns people into routine savers which only work for that proportion of people who are prone to save in any case and anyhow.
According to the research, it is the people who are least expected to react to these incentives and are most susceptible to financial shocks like dismissal and unemployment. So an innovative new approach is essential to turn their spending impulses or their spending spree into savings opportunities.
About Author: Alana Lissa is a business finance specialist providing financing advice and assistance to small and medium sized businesses. To get more information on the topic of debtor financing go visit My Business Loans Australia
Category: Saving Money
