1. Reinvest the Interest Earned
If your savings account offers 7% annual interest, you can reinvest the interest
earned back into the same account or another high-interest account. This creates
a compounding effect, where your interest earns additional interest over time.
For example: If you deposit ₹1 crore and earn ₹7 lakhs in interest annually,
reinvesting the ₹7 lakhs will increase your principal to ₹1.07 crore. In the
next year, your interest will be calculated on ₹1.07 crore, resulting in ₹7.49
lakhs in interest, and so on. This compounding strategy is safe and effective
for growing your wealth over time.
2. Diversify Across Multiple High-Interest Accounts
Some banks offer tiered interest rates based on account balances. For example, there a Banks in India offers 7% interest for balances between ₹5 lakhs and ₹1 crore. To
maximize returns: Split your funds across multiple accounts in different banks
offering similar rates. This ensures you stay within the high-interest balance
range and reduces risk by diversifying across institutions.
3. Explore Fixed Deposits with Higher Rates
While savings accounts offering 7% interest are rare, some banks or financial
institutions may offer fixed deposits (FDs) with even higher rates (e.g.,
7.5%-8%) for specific tenures . You can: Use the interest earned from your
savings account to open FDs. This locks in a higher rate for a fixed period,
providing predictable returns.
4. Ladder Your Investments
To maintain liquidity while earning higher returns, consider a laddering
strategy: Divide your funds into multiple fixed deposits or savings accounts
with staggered maturity dates. This ensures you have access to funds
periodically while still earning competitive interest rates.
5. Monitor and Adjust for Better Rates
Interest rates can fluctuate based on market conditions. Regularly monitor banks
offering competitive rates (e.g., DBS Bank, which offers up to 7% interest) and
shift your funds if better opportunities arise. Be cautious of any fees or
penalties for transferring funds.
6. Consider Low-Risk Alternatives
If you're open to alternatives beyond savings accounts, explore low-risk
investment options like: Government bonds or Treasury bills: These are safe and
may offer returns comparable to or slightly higher than 7%. Debt mutual funds:
These funds invest in fixed-income securities and can provide stable returns
with low risk.
Key Takeaway
To multiply your interest safely: Reinvest your earnings to benefit from
compounding. Diversify across multiple high-interest accounts. Explore fixed
deposits or low-risk alternatives for higher returns. Regularly monitor rates
and adjust your strategy. By following these steps, you can maximize your
returns while keeping your investments safe.
