For decades, financial common sense has had a simple dictum. Take 10% of your monthly income and put it into your savings. Over time this money can come to provide a useful buffer when times get lean, a nest egg for retirement or maybe a deposit on a property and an emergency fund should the unthinkable. This ‘common sense’ is usually imparted by baby boomer parents who are oblivious to the fiscal challenges faced by younger generations. With millennials spending three times the proportion of their income on housing that their grandparents and inflation rising well above worker’s wages in many countries, this common sense is far from workable for many.
Savings accounts… and why most of them just aren’t worth it
Even if today’s workers are lucky enough to squirrel away a little of their income month by month, this rarely enables them to make the substantial savings that they might expect, principally because most savings accounts offer pretty paltry interest rates. In fact the APY on a high street savings account is a meagre 0.06%. If you have a meaningful amount saved already (usually above $10,000) you can find an online bank who will be able to offer a more favorable rate of 1% but this is still unlikely to grow your money in a meaningful way.
That’s why for an increasing number of people, investment is the new saving.
An element of risk
Of course the reason many opt to save rather than invest is because all investments carry an element of risk. While this is not to be ignored, it can be mitigated. Aside from ‘common sense’ practices like keeping your stock portfolio diverse (yet not so diverse that your dividends become tiny even if your stocks are doing well), the best way to do this is by reaching out to the professionals. Making friends with a reliable stockbroker or property investment company gives you a huge inside track. These people can help to find the right investments for you in line with your specific goals.
Buy to let or buy to live
No matter what anyone says, property is still one of the safest places to put your money. The beauty of property is the sheer variety of ways in which you can invest. Depending on how much you have to invest you can decide to flip properties for a profit, become a buy to let landlord and build up a portfolio of properties that earn a steady passive income or simply invest in the roof over your head. The increased demand for privately rented accommodation has seen rents skyrocket over the past decade and a half, as a result there’s never a bad time to invest in getting on the property ladder.
Play the markets
If you play the stock or Forex markets, expect to carry out tireless research into the companies or currencies into which you’ll be putting your money and trust. In the case of Forex it’s advisable to start off small, trading between the same two or three currencies before expanding outward when you get the hang of it. While Bitcoin’s value has taken a nosedive of late that’s no indicator that crypto currencies are anything but a growth market. Investing in these alternatives may see you make healthy returns on your investment.