Top of main content

Types of savings

There are several ways to save money, and choosing the right one will depend on what you're saving for, or the specific savings goal that you want to achieve.

For some people it can be helpful to have a number of different savings methods, with each one for a specific type of saving. For example, you could use one method to cover unexpected costs, a different one to save up for a holiday, one to build up a down payment on a house, and so on.

There are three main factors to consider when you're saving:

  • Interest - the rate of interest you'll earn on the funds you deposit
  • Term - the length of time you're prepared to tie up your savings
  • Conditions - whether you must make regular small deposits, or larger amounts whenever you have a surplus

Here are some common ways to save, and the sorts of savings goals they can be good for:

Account type Key features Good for?
Regular or basic savings account Often come with rules about minimum monthly deposits, or maximum withdrawals, but may offer a slightly higher interest rate in return. Putting aside a proportion of your monthly income.
Fixed deposits (also called term deposits) Better interest rates than a regular savings account. Your money is "locked in" and inaccessible for a fixed period of time, from a few days to several years. They usually require a minimum investment, and there will be a penalty for securing early access to your money. They offer higher interest rates than many other savings accounts. Depositing funds that you know you aren't going to need for a while; can also be suitable for meeting longer term savings goals.
Investments

Comes with the risk that you might not get back what you invest. But if you're able to set your money aside for 5 years or more, investing in mutual funds or shares has the potential to make your money work harder than it would in a savings account.

We explain the pros and cons of investing money in more detail here.

 Setting aside money you're not going to need for years, such as your retirement savings.

Here are some common ways to save, and the sorts of savings goals they can be good for:

Account type Regular or basic savings account Regular or basic savings account
Key features Often come with rules about minimum monthly deposits, or maximum withdrawals, but may offer a slightly higher interest rate in return. Often come with rules about minimum monthly deposits, or maximum withdrawals, but may offer a slightly higher interest rate in return.
Good for? Putting aside a proportion of your monthly income. Putting aside a proportion of your monthly income.
Account type Fixed deposits (also called term deposits) Fixed deposits (also called term deposits)
Key features Better interest rates than a regular savings account. Your money is "locked in" and inaccessible for a fixed period of time, from a few days to several years. They usually require a minimum investment, and there will be a penalty for securing early access to your money. They offer higher interest rates than many other savings accounts. Better interest rates than a regular savings account. Your money is "locked in" and inaccessible for a fixed period of time, from a few days to several years. They usually require a minimum investment, and there will be a penalty for securing early access to your money. They offer higher interest rates than many other savings accounts.
Good for? Depositing funds that you know you aren't going to need for a while; can also be suitable for meeting longer term savings goals. Depositing funds that you know you aren't going to need for a while; can also be suitable for meeting longer term savings goals.
Account type Investments Investments
Key features

Comes with the risk that you might not get back what you invest. But if you're able to set your money aside for 5 years or more, investing in mutual funds or shares has the potential to make your money work harder than it would in a savings account.

We explain the pros and cons of investing money in more detail here.

Comes with the risk that you might not get back what you invest. But if you're able to set your money aside for 5 years or more, investing in mutual funds or shares has the potential to make your money work harder than it would in a savings account.

We explain the pros and cons of investing money in more detail here.
Good for? Setting aside money you're not going to need for years, such as your retirement savings. Setting aside money you're not going to need for years, such as your retirement savings.

Find out more about achieving your financial goal

Back to top  

Disclaimer

For persons in India. This publication has been issued by The Hongkong and Shanghai Banking Corporation Limited (HSBC), India, Incorporated in Hong Kong SAR with limited liability, for the information of its customers only. This publication does not constitute investment advice or an offer to sell, or a solicitation of an offer to purchase or subscribe to any product / investment. The information herein is derived from sources believed to be reliable and the concerned Information Provider(s) have duly authorised HSBC to use such information provided by them. Whilst every care has been taken in compiling the information, HSBC and the concerned Information Provider(s) do not guarantee, or make any representation or warranty and accept no responsibility or liability as to its accuracy or completeness and shall not be liable for damages arising out of any person's reliance upon this information or any action taken or not taken as a result of any material contained in the publication. Expressions of opinion are those of HSBC and the Information Provider(s) only and are subject to change without notice. HSBC has not independently verified any information provided by the Information Provider (s) or that has been derived from the sources believed to be reliable by HSBC. Opinions expressed herein do not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this publication. This document is for circulation in India only. No part of this publication may be reproduced or stored in a retrieval system without the prior written permission of HSBC. Any liability is accordingly expressly disclaimed by HSBC, its officers, directors and employees.