The following is my answer to a Quora
question: “Is
it true that savings in a bank account is useless?”
Savings in a bank account are not useless.
People put money there for accessibility
and liquidity. Some people also use them to put aside excess funds from their
earnings credited into the account from whatever source of income they have. However, savings are not optimal for growing
wealth. The interest rate is negligible,
and way below the inflation rate. They
are not meant for that use. When you
have a substantial amount in your savings, you should consider investing into
some sort of index fund or an investment-linked plan.
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