Most save to build a secure economy in the long term. You do not want to worry about unforeseen costs or be able to live with a gold edge when you retire. The question is how to save money and at the same time make money?
Learn about savings and investments
To make money on your capital, knowledge is required. The interest rate on ordinary savings accounts with a deposit guarantee is so low that you go back after inflation. To be able to make money, savings rates of over 3% are required. You can find this either through niche companies’ savings accounts, funds or shares. Most people like savings accounts because the value does not rise or fall every day. Today there are accounts giving up 6.5% which is a good savings rate.
Consider a deposit guarantee
The reason why some players may offer a higher savings rate is because their accounts are not covered by a state deposit guarantee. If an account has a guarantee, it means that you have a protection up to USD 950,000. If the company goes bankrupt, the state will compensate you for your money underneath. This does not have to mean that savings accounts without guarantee are bad. Everything depends on how the company behind the savings account looks in terms of numbers. Therefore, check the company’s equity / assets ratio and that sales are stable. But it is true that accounts without a deposit guarantee are more risky, but they also give better savings rate.
Save long term
You will get the best effect on your savings if you save long-term. If you reinvest the interest rate every year, your money will grow faster. The effect is called interest on interest and Albert Einstein has said it is the world’s eight wonders.
Example: If you place USD 10,000 in a savings account that gives 5% in interest, after 10 years you have USD 16,289. You have thus received a total of USD 6289 in return. But then one must also remember that the tax on income from capital is 30%, which must be paid on the interest rate every year. In addition, inflation reduces the purchasing power of your money, so you need to deduct 2% of the value each year.