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DISADVANTAGES OF SAVINGS ACCOUNT

DISADVANTAGES OF SAVINGS ACCOUNT
A main disadvantage of savings accounts is, in the case of notice accounts , that our money is often tied up for a specific period of time and cannot be accessed without incurring large penalties. Additionally, if our account does not have a fixed interest rate, the interest rate we are offered can diminish over time, thus lowering the investment return on our savings. Similarly, if we have a fixed interest rate and the basic interest rates rise, we could be earning less on our savings than if we had a variable interest rate. The main disadvantage associated with stock-market linked accounts is that they tend to involve a lot of risk. If our savings are invested in stocks and shares which increase in value, we may make impressive returns on our investment. If, on the other hand, the stocks and shares fall significantly in value, we may retain serious losses. It is important to assess our attitude to this risk before investing our money in an investment savings account.

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