Maximum funds one can keep in bank account?

[avi]

Guys what is the maximum amount one can keep in bank account? Couldn't get much info from Google also.

If I have 1 Crore can I keep all in the bank? The interest will be around like 7 lakhs/year... And if one can keep it, do people actually do this? I can spend rest of my life without doing any job if I can get such interest from bank.

Any info appreciated...

 

[TheIndian]

Guys what is the maximum amount one can keep in bank account? Couldn't get much info from Google also.

If I have 1 Crore can I keep all in the bank? The interest will be around like 7 lakhs/year... And if one can keep it, do people actually do this? I can spend rest of my life without doing any job if I can get such interest from bank.

Any info appreciated...

you could keep a duotrigintillion (that is 10 to the power of 99, if you know what that means, 10 with 99 zeros after it.) in the bank, and you would be royalty to the bank.
Yes you could do that, but remember this, money in the bank is always diminishing since inflation is invariably greater than the interest you get, so to keep up with inflation, the interest you get should be more than your needs and surplus needs to be deposited back in the bank. BTW the interest will be around 9.50 lakhs a year pre tax, one could negotiate even more with some banks.

Now the real Question, do you have a crore, or you are getting into hypothetical TP.

 

[blr_p]

If I have 1 Crore can I keep all in the bank? The interest will be around like 7 lakhs/year... And if one can keep it, do people actually do this?

You can do it but let's add another dimension. How much can you get back in case of bank failure.

The max is 2 lakhs. That is all that can be insured. Whether its 1 account with x crores or x accounts of the same amount with the same bank.

if you had 4 lakhs, then you will only be insured for 2 lakhs.

However if you kept 2 lakhs in 2 separate banks then you would get 4 back. 2 from each.

I can spend rest of my life without doing any job if I can get such interest from bank.

Any info appreciated...

Banks pay interest at slightly higher than inflation. Basically your money grows to be ahead of inflation.

buisnesses yields profit. Which can be much higher than interest and you get to make more real money. course you could lose it all too but that's another question

 

[6pack]

With inflation rising every year, after a few years that 7.5 or 9 lacs will look small. Also it might also happen that banks will reduce the interest rate in coming years.
If you have that kind of money, you should invest that money in couple of different ways and not keep everything in one place.

 

[TheIndian]

You can do it but let's add another dimension. How much can you get back in case of bank failure.

The max is 2 lakhs. That is all that can be insured. Whether its 1 account with x crores or x accounts of the same amount with the same bank.

if you had 4 lakhs, then you will only be insured for 2 lakhs.

However if you kept 2 lakhs in 2 separate banks then you would get 4 back. 2 from each.


Banks pay interest at slightly higher than inflation. Basically your money grows to be ahead of inflation.

buisnesses yields profit. Which can be much higher than interest and you get to make more real money. course you could lose it all too but that's another question

Going by this logic, one should not keep more than 2 lakhs in any bank. I guess you could find 50 banks.

But then again you could find one good bank, as India has a track record of NOT ONE depositor loosing even 5 paise in a bank deposit even though the banks themselves folded up. RBI has ensured our safety quite well.

Banks pay interest rates slightly higher than inflation is a fallacy, do not buy into it.

Managing large sums of money is for experts , and I mean real experts, not the kind your "friendly" neighborhood private / MNC banks offer, who really care only about the fees they can suck off you. Case in example, the moment our various protection agencies put a stop to sucking money off you several banks shut down "wealth management" totally. HSBC being the most prominent.

 

[letmein]

You won't 7% if you keep it in a bank account, interest rate is around 4% I think.
Better would be to put it in a FD I think, you get 8.5% interest.

 

[blr_p]

Going by this logic, one should not keep more than 2 lakhs in any bank. I guess you could find 50 banks.

it becomes unwieldy, so the larger point is why can't GOI insure more than 2 lakhs ?

it's been that amount for decades now.

But then again you could find one good bank, as India has a track record of NOT ONE depositor loosing even 5 paise in a bank deposit even though the banks themselves folded up. RBI has ensured our safety quite well.

If you have more than 2 lakhs with any one bank, you will only get back 2 lakhs. Banks have collapsed and people have certainly lost more than "even 5 paise".

COmpare with the US, FDIC used to be up to a quarter of a million, it was raised to $400k.

Whereas we are still stuck with $3.2k insurance. What can 2 lakhs buy these days ? a nano !!

2 lakhs is a generic govt compensation figure. You lose your home in a flood, govt gives you 2 lakhs. You lose a family member in some train/bus accident, 2 lakhs etc.

Banks pay interest rates slightly higher than inflation is a fallacy, do not buy into it.

Money compounds so it does grow. inflation isn't compounded so after time a bank deposit will outstrip inflation.

They have running costs and have to pay salries. They manage to create money because of fractional banking. They only have to hold 4% of the total amount of loans they make.

Managing large sums of money is for experts , and I mean real experts, not the kind your "friendly" neighborhood private / MNC banks offer, who really care only about the fees they can suck off you. Case in example, the moment our various protection agencies put a stop to sucking money off you several banks shut down "wealth management" totally. HSBC being the most prominent.

Anybody want to add to this ?

 

[letmein]

Money compounds so it does grow. inflation isn't compounded so after time a bank deposit will outstrip inflation.

??

 

[TheIndian]

it becomes unwieldy, so the larger point is why can't GOI insure more than 2 lakhs ?

it's been that amount for decades now.


If you have more than 2 lakhs with any one bank, you will only get back 2 lakhs. Banks have collapsed and people have certainly lost more than "even 5 paise".

COmpare with the US, FDIC used to be up to a quarter of a million, it was raised to $400k.

Whereas we are still stuck with $3.2k insurance. What can 2 lakhs buy these days ? a nano !!

2 lakhs is a generic govt compensation figure. You lose your home in a flood, govt gives you 2 lakhs. You lose a family member in some train/bus accident, 2 lakhs etc.


Money compounds so it does grow. inflation isn't compounded so after time a bank deposit will outstrip inflation.

They have running costs and have to pay salries. They manage to create money because of fractional banking. They only have to hold 4% of the total amount of loans they make.


Anybody want to add to this ?

1) I do not think he is out to question the banking system, perhaps you could do that. As per your suggestion he should go to 50 banks, as per mine, find one good bank.

2) Show me one instance where banks have folded up in India and depositors have lost their money. Indian depositors in foreign banks which folded up overseas have not lost money. (I know what I am talking about, do you?)

3) Trust me you do not want to be a consumer in the US as a user of any financial services compared to India, Whether is be bank deposits, credit cards, auto loans, home loans, you name it. We are way better off, so lets stick to the topic on hand.

4) Compounding the interest? What interest? The interest he hopes to live off ? Oh You forgot that part did you? Not that it matters in this example , just so you know inflation is compounded.

5) Again, anyone who thinks interest outstrips inflation, well just look at last 3 years.

Cheers.[DOUBLEPOST=1393393758][/DOUBLEPOST]

You won't 7% if you keep it in a bank account, interest rate is around 4% I think.
Better would be to put it in a FD I think, you get 8.5% interest.

Bank Account, FD .. semantics - Essentially in a bank, trust me you can get 10% and more too, you just need large enough sums.

 

[blr_p]

??

compund interest yields more than simple interest

now consider that over decades.

 

[letmein]

Bank Account, FD .. semantics - Essentially in a bank, trust me you can get 10% and more too, you just need large enough sums.

Interested in knowing more about this. So you can get rates equal to, or a little more than the interest rate? I guess if you have a large enough principal amount and you are getting 10%, you can live off the interest alone.

 

[blr_p]

1) I do not think he is out to question the banking system, perhaps you could do that. As per your suggestion he should go to 50 banks, as per mine, find one good bank.

2) Show me one instance where banks have folded up in India and depositors have lost their money. Indian depositors in foreign banks which folded up overseas have not lost money. (I know what I am talking about, do you?)

3) Trust me you do not want to be a consumer in the US as a user of any financial services compared to India, Whether is be bank deposits, credit cards, auto loans, home loans, you name it. We are way better off, so lets stick to the topic on hand.

4) Compounding the interest? What interest? The interest he hopes to live off ? Oh You forgot that part did you? Not that it matters in this example , just so you know inflation is compounded.

5) Again, anyone who thinks interest outstrips inflation, well just look at last 3 years.

Cheers.

1) not questioning the banking system just threw that in as a point to consider. 50 banks is unwieldy. I'd stick with more than one and less than five.

2) stories i heard that happened about 30 years back locally. Will have to talk to a relative to get more details. But depositors did get washed out. So bank collapsing is not unheard of as you suggest. Go back far enough and you will find instances. It does not happen often. RBI is over protective in this regard.

3) why ? some investments are more risky than others, read the fine print carefully. Topic is done i wanted to discuss related matters too.

4) what do senior citizens live off then. A big enough nest egg that sustains them over many years. You can get a pension scheme but that's just a variation on the same.

5) that's what i mean, look longer than 3 years. Its not a lot but the effect is there nonetheless.

Essentially in a bank, trust me you can get 10% and more too, you just need large enough sums.

care to say more.

 

[letmein]

compund interest yields more than simple interest

now consider that over decades.

How is inflation not compounded? An item costs Rs. 100 today, inflation is 10%
At end of year 1, item cost is = 110
At end of year 2, item cost is = 110 + 110*10% = 121

 

[TheIndian]

1) not questioning the banking system just threw that in as a point to consider. 50 banks is unwieldy. I'd stick with more than one and less than five.

2) stories i heard that happened about 30 years back locally. Will have to talk to a relative to get more details. But depositors did get washed out. So bank collapsing is not unheard of as you suggest. Go back far enough and you will find instances. It does not happen often. RBI is over protective in this regard.

3) why ? some investments are more risky than others, read the fine print carefully. Topic is done i wanted to discuss related matters too.

4) what do senior citizens live off then. A big enough nest egg that sustains them over many years. You can get a pension scheme but that's just a variation on the same.

5) that's what i mean, look longer than 3 years. Its not a lot but the effect is there nonetheless.


care to say more.

2) I am 49, and not one Indian depositor has lost money in the last 40 years. You yourself admit, you haven't heard of anyone loosing money in the last 30.

3) No matter what, you are better off as a financial services consumer in India than any part of the world. Check this out, and if you have any instances where we are worse off, point it to RBI and are happy to rectify it.

4) If you notice their life deteriorates with each passing year, do you seriously think medical costs increase at par with inflation? As do other costs ? I remember buying movie tickets for Rs 5.00 in the best theaters in town.

5) Well I was being simplistic for everyones sake, however if you have data for more years, would be happy to take a look at it (and stand corrected, if at all it comes to that)

Cheers[DOUBLEPOST=1393395548][/DOUBLEPOST]

Interested in knowing more about this. So you can get rates equal to, or a little more than the interest rate? I guess if you have a large enough principal amount and you are getting 10%, you can live off the interest alone.

If you have a crore or more, contact me.

 

[manucitc]

2) Show me one instance where banks have folded up in India and depositors have lost their money. Indian depositors in foreign banks which folded up overseas have not lost money. (I know what I am talking about, do you?)
.

Does Co-operative bank account here..?

 

[pr0ing]

@blr_p
Inflation is always a yearly figure. So it will also compound.
http://www.inflationdata.com/inflation/Inflation_Rate/Long_Term_Inflation.asp

Another interesting thought for the salaried individuals here.
If your annual hike is less than the annual inflation, you are essentially earning less than what you earned in the previous year
To all those who are in college now, please learn about financial planning both short term and long term. The best time to start saving/investing was yesterday, the second best is today.

 

[letmein]

Coming back to the topic, is doing what the OP was asking really feasible? If one has a corpus of say, 1 cr, can you live off the interest for the rest of your life? Purchasing power will of course reduce in the future.

 

[blkrb0t]

Coming back to the topic, is doing what the OP was asking really feasible? If one has a corpus of say, 1 cr, can you live off the interest for the rest of your life? Purchasing power will of course reduce in the future.

I think so. If you can be frugal in every aspect of your life, and save as much as you can, you can definitely live a decent life on that sum of money.

But then again, who wants to do nothing for the rest of their lives? With so much bank balance behind you, there will be enough free time to learn and build your skills in a particular field; the one of your liking.

You can also experiment freely and move from one branch to other without worrying about financial and familial repercussions.

 

[blr_p]

@blr_p
Inflation is always a yearly figure. So it will also compound.
http://www.inflationdata.com/inflation/Inflation_Rate/Long_Term_Inflation.asp

Yes, but quarterly compounding will beat it.

 

[letmein]

So I did a quick search and came across this calculator:

http://buyupside.com/calculators/inflationjan08.htm

Now assuming that today you can live comfortably in the 8 lakhs you get from the interest, in 20 years, assuming an 8% rate of inflation, you will need 37 lacs to match the purchasing power of the 8 lacs today.