In today's uncertain economy, getting the most out of your savings is crucial. One of the easiest ways to improve your financial well-being is to ensure the interest on your savings outpaces the inflation rate. However, many of us need help figuring out where to begin - how much should we save? Where should we put our money? and how can you make your savings work harder for you?
For expert guidance, we consulted Nick Charalambous, Managing Director of Alpha Wealth. Here is Nick’s guide to achieving the best possible returns on your savings by selecting the right institutions and exploring alternative savings options with competitive advantages.
1. Get the Best Return on Savings
Look beyond Irish banks for better returns on your savings. Traditional options like the Credit Union, Post Office, or Irish banks are no longer the only choices. International institutions such as Revolut, Trade Republic, Raisin, and N26 offer competitive interest rates. Diversifying your savings across these alternatives can yield better returns and is a crucial strategy for maximising your savings potential.
2. Start Saving Early
Saving early is crucial to harness the benefits of compounding. Compounding means earning interest on your interest, accelerating wealth growth over time. The earlier you start, the more time your money has to grow, leading to significantly larger returns. Even small, regular contributions can grow substantially, providing a strong financial cushion for the future. Start early to maximise your investments and ensure a secure, prosperous financial future.
Warren Buffett advises saving before spending, meaning you should prioritise setting aside money before non-essential purchases. This approach builds a financial cushion, allowing you to invest in long-term opportunities without worrying about debt. Being smart with your money and planning ensures financial stability and reduces stress. Save a portion of your income first, then enjoy spending what's left, knowing you’ve secured your future.
4. Ensure the return is higher than rate of inflation
Basically, you want to ensure that the interest or returns you're getting on your savings are higher than the inflation rate. If inflation erodes your money faster than it grows, you lose value. Aim for savings or investments that outpace inflation so your money retains its value over time and you don't lose out.
5. Consider your savings goals: short, medium and long term
Setting short, medium, or long-term financial goals is essential to choosing the right place to save money. For short-term goals, an instant access savings account works well. For longer-term savings, consider options from insurance companies like Zurich or Aviva, which often offer better interest rates. Matching your savings goals with the appropriate institutions will help maximise your returns.
Book a financial review with Alpha Wealth at www.alphawealth.ie for trusted financial advice on tax savings, pensions, investments, and more.
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