If you are earning an income, then you should start saving up, because tomorrow is unpredictable but either way, you will need something to live off. Having a savings culture is great, but if you don’t know what to do with your savings, then you will end up wasting or losing them. You need to know where to invest your savings and the places to avoid.
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The Top 5 Places to Invest Your Savings
If you are looking for ways to invest your savings, below are 5 solid ways to consider.
In a Business
Starting a business is a good way of investing in your savings. One thing you need to know before starting your business is that it will take you a lot of patience to succeed at growing and nurturing it. A lot of people run their own businesses, but it does not mean that running a business is easy.
On the upside, once your business starts growing, you will start seeing returns, but only if you work hard to grow it and don’t give up easily. The business will make you more money than what you initially invested in, and if you have loved ones it can be a good way to leave a legacy to them once you die.
Cryptocurrency
A fascinating fact about cryptocurrencies is that they are always increasing in value. The whole idea of blockchain is a bit technical and still confusing for some people but once you grasp it, you will get to understand the importance of investing in cryptocurrencies. Before you invest anything in cryptocurrencies, make sure you understand it to avoid losing most, if not all your savings.
Direct Equity
Stocks are a volatile asset class, but they are still a great investment option. The good thing about investing in direct equity is that it gives you a chance to diversify your investment across different markets, so you are not putting all your eggs in one basket. Once you get the hang of it, you will be able to enjoy great returns
Money Market Funds
Money market funds are not the same thing as money market bank accounts. Money market funds are open-ended mutual funds that invest in highly liquid instruments. An advantage of investing in a money market fund is that it has the benefits of capital preservation with a return. It is also a safe option, considering that you can invest in different cash assets. On the downside, you may risk losing your money in such kind of investment.
Precious Metals
Investing in precious metals like gold or silver, etc is a great idea if you want your savings to retain and increase in value. Such precious assets are unlikely to fall in value even when other assets fall eg bonds and stock. So, it will be a good idea to invest some of your savings in some of these precious metals.
Top Places to Avoid
When investing in your savings, below are some of the places you should avoid putting your money.
Savings Account
You have probably grown up hearing the narrative that a good place to keep your savings is a savings account. You need to know that putting your money in a savings account has no difference from storing it under your pillow. It remains as it is, and you will not receive much as returns. So instead look for places that will help increase it in value.
Whole Life Insurance
People resort to taking out a whole life insurance policy as a way of investing their savings. It may seem like a resourceful way of disposing of your savings but that might not be the case. You may fall for the cash value component but looking at the overall gains and downsides of having a whole life insurance policy as a plan for your savings, it is better not to invest in it.
Normally term life insurance or even no exam life insurance are better bets when it comes to affordability. With the savings that you get, you can always invest the rest.
Your Mattress
Any financial expert would discourage you from stashing money away in your mattress or in a home safe. Stashing cash away does not make it multiply or appreciate in value. Also, does not grow any returns for your money and furthermore, it is not a safe place to have your money sitting. This is a rather archaic method of saving that has been replaced by other better methods.
Collectibles
Sometime back, collectibles were a good way of investing in your savings. The thing is, times are changing now, and what people may hold valuable today may be worthless tomorrow. Also, you might grow an attachment for your collectibles which might make it hard to turn it into cash when you need to.
Before you heed any advice on how to invest your savings, make sure you understand what you are getting yourself into. Most of the time people put their money in places then they regret later, so don’t invest blindly.
About Carson Derrow
