Lazy money: Hidden cost of letting your money sit idle

july 31, 2025

Images: Shutterstock

If you’re in the habit of sitting on cash, you’re missing out on building wealth, resulting in greater loss over the long run. 

It is like lazy money, the corpus that sits in the savings account, earning very low interest. This makes your financial growth stagnant as it loses value over time.

Most banks offer a savings account interest rate of only 2-4% annually. You can earn more through smarter investment options like mutual funds, fixed deposits, etc. 

Returns 

In India, inflation rises by nearly 5-6% every year. By earning only 2-4% of returns, your money loses its value, making you poorer over time. 

Inflation

Investment with low interest rates results in smaller gains, even after compounding. Investments with higher returns help you build real wealth. 

Compounding

Diversifying your portfolio by investing in equity, recurring deposits, bonds, ETFs, and more offers higher returns, transforming your financial trajectory. 

Opportunities 

While it is advisable to keep 4-6 months of expenses in your savings accounts for emergencies, hoarding your money is a different thing. Keep a balance of liquidity and growth.

Emergency funds

A large balance in your savings account gives a false sense of security and leads to unnecessary expenditures. Changing this mindset can help you plan strategically. 

Psychological trap

Investment options like index funds, government bonds, and FDs have relatively lower risk than equities but still offer better returns while keeping your money safe and accessible. 

Alternatives

Smart ways to make your idle cash work for you

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