Excess savings in savings account quietly shrink wealth

Most Indian savings accounts offer annual returns of 2.5% to 4%, while inflation erodes purchasing power, according to Livemint. Leaving large sums idle means the money's real value declines over time, even as the nominal balance appears to grow.

Financial planners recommend holding a liquid emergency fund equal to six months of essential expenses. Any surplus beyond that cushion should be invested in instruments such as fixed deposits, recurring deposits, or mutual funds, based on the individual's risk appetite and time horizon.

The article advises periodic review of account balances. If unallocated cash keeps accumulating, it should be directed toward long-term goals like property, education, or retirement to avoid a quiet erosion of wealth.