Hello beautiful people Hands up who wishes they had more savings? One Money Grower contacted us to say he wanted to start saving (big cheer) but wasn’t sure where to put his money. That sounds like a good upbeat topic to start the year with so we’ll look at savings for the next few days. The most important question is: WHAT ARE THE SAVINGS FOR? Example: Do you want to save some money for a crisis or do you want to save for a child’s education or do you want to save for retirement? If you have a crisis (say, you need to pay for a medical emergency) then you’ll need to be able to get your money quickly and therefore some types of investments are not suitable. But if you are saving for your 8-year-old child’s university education, you know you have about 10 years before you need the money so you can tie up your money for longer. If you will need your savings in a hurry, a bank account will probably be the best place to keep the money. (Tomorrow’s post will be all about how to save for an emergency.) But bank accounts don’t pay a great interest rate. They are fine for emergency savings, but if you are saving for something far in the future you will lose money over time in a bank account because of inflation. You need to look for some other investment. Here personality and confidence matter. Are you are a nervous person? Would you be scared if your money lost value for a while? Does the stock market seem too complicated or too scary? If the answer is yes then perhaps your money should be in a simple, safe investment where it grows steadily. One good example would be RSA retail bonds. We will look at these on Friday. But the best returns overall can be found on the stock market if you save for the long term – for at least five years. Where to start? What to do? We need to go through this carefully, so we’ll start talking about investing in shares on Sunday. TOMORROW: Emergency funds
Posted on: Wed, 07 Jan 2015 17:53:11 +0000
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