Saving is always present when it comes to putting in order or planning our personal finances. Saving gives us security against eventualities, allows us to increase our economic expectations for the future and makes it possible to improve our living conditions in the medium and long term.
Savings can simply be kept in a bank, as long as the savings currency is solid and backed.
Currently there are many possibilities not only to keep your savings safe but also to maximize them and obtain extra profits. To get more out of your savings you will have to invest them in order to maximize the possibilities and make them more profitable.
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What to invest your savings in
When we think about investing our savings we have doubts as to whether it is really a good option to take the risks of an investment or keep them insured in the bank. That is why we propose alternatives so that you can make a decision that implies that your savings are safe and more profitable.
If you fear putting your savings at risk and feel that you do not have the necessary financial training to use other strategies, the fixed deposit it will be your first choice. You will only have to put all your savings in bank deposits looking for the highest profitability. The profitability will depend on the time you put to earn interest on your savings and the agreements established by financial institutions.
If you want to increase the profitability of your savings, either because you have some financial training or you can get advice from an expert, you can choose the following options:
1. Actions
One of the most profitable financial products is stocks. If you want to make your savings more profitable in the medium and long term, you can invest in issued securities or shares. These actions are offered by companies to finance their activities. Once you have invested, you will receive from the company the dividends that correspond to you.
But if for some reason the dividends are not acceptable to you, you can always sell the shares once they increase in value. You just have to consider that given the volatility of many stocks it can be a risky form of investment in the short term.
2. Crowdfunding
It is a form of investment where several people contribute money to projects of various kinds that are underway or about to start. Each investor contributes a small amount and knows from the beginning what his percentage of profit will be according to the amount invested and the chosen project.
Its profitability is acceptable and is done through online platforms. There are completely automated methods to invest in Crowdfunding so you don’t have to spend a lot of time.
3. Investment funds
Those willing to risk and earn more with their savings can opt for mutual funds. This consists of the creation of a joint fund by several savers who assign their savings to a professional who makes the decisions on how to invest that patrimony.
The funds can be invested in various assets such as bonds, stocks, derivatives, currencies, real estate, or commodities. It is essential that investment funds are managed by professionals, as this type of investment may have a risk of loss.
4. Real estate
Investing in real estate is one of the best known and easiest ways to increase your savings. When you acquire a property you can rent it for a while and later sell it for a higher price. Among the most common assets are homes, commercial premises and land for tourism or construction. It is a safe and direct form of investment and has the following characteristics:
- A property does not lose value over time and price volatility is very low.
- If it is about homes, it will always be among the essential goods and there will be no shortage of buyers.
- Well located commercial premises are usually more expensive than homes.
- Land for construction, exploitation or for tourist purposes acquire a lot of value over time, although they depend on the area or region where they are located.
5. Financial products
They include different instruments or figures in which you can invest and save. Depending on the financial product you choose, you can adjust the levels of risks and profits that give you security.
These products are issued by private entities such as banks, stockbrokers, insurance providers, among others, or by a public entity. There are different types and among the most common are:
- Derivatives and options. They are contracts to deliver a financial benefit or to grant the right to obtain a benefit in the future. The first type is called “forwards” and the second, “options”.
- Futures. It consists of contracts to buy or sell at an agreed price, be it a real or financial merchandise within a given period.
- Bonds. These are financial securities issued by companies or governments. Its acquisition generates a fixed return for a stipulated time. Some bonds are also issued at floating rates.
- Derivatives that allow you to exchange one bond for another.
- Hedge funds where depositors seek a secure return through an experienced broker.
- Currency or forex market.
Even if it is difficult for you to choose the financial product that best suits your needs, today you have experts and advisory companies in this matter and with free technological tools that will help you minimize risks and increase your profits.
Basic tips before investing your savings
- Don’t invest all your savings, allocate only a reasonable amount for this purpose
- Before investing, find out about the matter, study all your possibilities and with which one you feel comfortable and confident. Identify your risk tolerance to decide whether you prefer volatile or more stable investments.
- Be sure to consult an expert in the field and be sure to review their credentials. Make sure you know the commissions that you will have to pay for the management of your savings and ask them to solve all your doubts.
- Don’t invest to make a profit in a hurry. Plan and evaluate the pay period according to your needs. Depending on your decision at the time of investing, you should consider the terms to receive the benefits.