As the economy continues to recover and many consumers are again starting to have a few bob left over at the end of the month, the question for them now is what to do with this extra money. In the past, this money was diverted into a deposit account to keep it separate from the day-to-day spending within your current account. But with interest rates now hovering around 0%, this really is a questionable approach. One of the questions that Financial Brokers are most frequently asked today is, “What is the best savings plan for my money?”
The answer to this needs careful consideration if proper savings advice is to be given. What are you trying to achieve with your savings – are you saving for a rainy day or have you a specific goal in mind, maybe to fund education in future years or to buy a new car? What are your time horizons or do you have any? What is your appetite for risk?
A deposit account is a suitable vehicle if you are putting money away in the very short term. It is accessible and secure (at least up to €100,000). But if your target is to save for a number of years, deposit accounts come with a price. As long as price inflation exceeds the interest rate payable (which remember is pretty much 0%), the value of your money is falling all the time. You won’t be able to afford in the future the things that you can just about afford today. Therefore the first of our savings tips is to consider your timeframe very carefully!
Our second savings tip is to consider your appetite for risk. If you are not satisfied with your money effectively losing value every day as it sits on deposit, a Financial Broker will help you identify your own tolerance for risk, and will then help you identify how much risk is appropriate for you within a savings plan. Once you know the appropriate level of risk, they will then find the best savings plan to meet your specific needs. This might in fact be a deposit account, or instead it may be a savings policy with a life assurance company. The one thing you can be sure of though is that you are getting the right savings advice to meet your specific needs.
Ultimately, understanding what you are trying to achieve with your money sits at the heart of this. Once you are clear on the end goal for your money, your timeframe and your appetite for risk, you can now start planning with confidence. This brings us to our final savings tip! Talk to your Financial Broker and get their help in planning your savings approach. This is definitely a better way forward than blindly placing your money on deposit and watching the value of it erode away over time.