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Savings

by Eric Morris

In these times wherein increased levels of personal debt are the norm for many citizens, savings are in real danger of becoming just another old-fashioned idea. Whatever the odds, it is always wise to save for a rainy day. People need to rediscover the forgotten art of frugality. If a person learns to save, there would be no panic when unexpected expenses crop up such as a car or a washing machine breaking down.

Saving entails putting money aside either in a bank or investing in various plans. In economic terms, personal saving has been defined as personal disposable income minus personal consumption expenses. Income that is not utilized for the purpose of buying goods and services is considered as savings. In order to save, a person needs to budget efficiently. Saving must be accomplished with a goal in mind. Saving is closely related to investment. Investors can earn considerable interest by depositing their savings in various schemes. The U. S. Government, banks and financial institutions offer a variety of saving schemes.

Treasury bills are a good investment option. Much like bonds, treasury bills are sold at a discount of the par value. They mature in one year or less and are considered to be the most risk free investment choice. Interest is paid on maturity of the bond. Treasury bills are issued with maturity dates of 4 weeks, 91 days and 182 days.

Treasury notes have a maturity period ranging from 2 to 10 years. They have a coupon repayment plan every six months. The U. S. mortgage market uses the yield on a 10-year Treasury note as a benchmark for setting mortgage interest rates. Treasury bonds are issued with maturity dates ranging from ten to thirty years. Like treasury notes, they have a coupon payment plan every six months.

Savings bonds are another popular savings option. Non-transferable securities can be cashed before the maturity date, after a holding period of twelve months. Interest is paid on redemption of the bond. Savings bonds are registered securities and can be replaced if lost or destroyed. Savings are a way of insuring an individual against emergencies, thus doing away with the need for certain types of insurance cover.

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