How to make money with a savings account

Posted by Felix Okoli on Thursday January 31, 2013 at 16:6:29:

A savings account is probably one of the laziest ways to make money in Nigeria due to the low interest rates. In reality however, you can make some small money with it if you invest in the right bank and with the right conditions.

Putting money in a savings account is like planting a tree seedling in a soil. If the seed and soil are good as well as the environmental conditions, it is mostly likely going to grow into a tree. How tall it will grow will depend on things like heredity as well as the other factors involved.

Ways to make money with your savings account

Interest on savings account
Some banks in Nigeria do offer very low interest rates of about 1% but some however offer as high as 7% p.a. so if you want more interest on your money, then invest in those banks with a higher returns on your savings.

Let's assume your bank pays you about 3% of interest on your savings and you've saved up to N500,000, then that amount could earn you:

(500,000 * 0.03) = N15,000 per year or N1250 per month depending on the interest rate.

If you are focused on earning more interest on your savings account, then you should look for a bank that offers higher interest for savings and you can get this from the CBN regular publication for interest rate on banks. I listed some here

The amount of money a savings account would generate for you will depend on some factors such as:
- The amount saved
- The interest rate on savings
- The period of time for which it was saved

Saving and investing
A smarter way to also make money with your savings account is by using it to save for the long term in order to invest in other assets that earn money.

A savings account allows you to follow a disciplined approach to saving money so as to take advantage of future investment opportunities. When you put money in your savings account, you are less likely to want to withdraw it at the same time so the money stays in a place that is not too close for easy spending while at the same time grows. as you save more earn interest and invest in other money making opportunities.

So, a saving account allows you to save money for future investments that could also earn money such as buying shares, buying land, starting a small business and so on. A savings account allows you to convert your funds to other assets that could make money for you in the long term.

Those are my own tips on making money with a saving account. So you can make money either from interest or from taking investment opportunities which your savings allows you to.