Saving is the best route to financial security, and it’s never too early to start. If you don’t have any savings set aside, you will find yourself in a tricky position when you reach retirement age and realize that you can’t support yourself. It’s important that you start thinking about how you spend and trying to make cutbacks so you can build up a healthy savings account.
However, saving money is only the first step. If you really want to improve your financial position, you actually need to do something with it. The biggest mistake that people make is letting their savings sit there for years without doing anything with them. If you do that, you might make a little money on interest, but if you really want your money to work for you, investing is the only way to go.
A lot of people are scared off by investing because they think that you need to be some kind of financial expert to do it successfully, but that isn’t the case at all. Anybody can invest money if they spend some time researching their different options and take some advice from the right people. If you can do that and learn how to invest your money properly this year, you will be in a much better financial position in the future.
The first step is to assess your different options and think about what kind of investment might be best for you. These are some of the most sensible things that you can do with your savings in 2020.
Emergency Funds
If you don’t already have one, setting up an emergency fund should be your first priority. An emergency fund is there to help you out when you are hit with an unexpected expense like a broken down car or a hole in your roof. If you don’t have the money to pay for these things when they come up, you will end up relying on credit cards and that’s never a good road to go down.
If you don’t have an emergency fund set up already, you should move a portion of your savings into a different account. Then you can start splitting the money that you save each month between your emergency fund and your normal savings. It does mean that your savings build up slower, but you can save yourself from a lot of financial trouble by having that emergency fund there so it’s worth doing.
High-Interest Savings Accounts
If you want to see your savings grow without any risks, high-interest savings accounts are the best way to go. You won’t make as much as you would with any of the other investments that we will look at on this list, but you also don’t have any of the risks. However, you shouldn’t just put your money into a savings account and leave it there because you might not be getting the best interest rate.
In some cases, your money could actually be losing value in real terms if inflation is higher than your interest rate. That’s why it’s important that you shop around for the best deals and move your money around regularly. This way, you can be sure that you’re always getting the maximum amount of interest possible, and you don’t risk losing money to inflation.
Real Estate Investments
Real estate investments are one of the most popular options right now because there is a lot of money to be made if you get it right. Just make sure that you don’t fall into the trap of thinking it’s easy because you still have to put a lot of work in.
House prices are on the rise and there are more people than ever renting, so if you have the money to put a down payment on a house, you will see a good return. It’s a great way to get some regular income if you rent the property out and if you decide to sell the property later on, you should make a big profit.
However, managing a property is a lot of work and if this isn’t a full-time occupation, you need to use a property management company to deal with the day to day maintenance and the collecting of the rent. The team at In House Property Management and other similar property management companies will deal with the tenants, ensure that they pay rent on time, and handle any repairs and maintenance that needs to be done on the property. That way, you don’t need to worry about it, you can just collect the money at the end of each month.
As well as renting properties out, you could also consider flipping houses. If you can find a cheap property that needs work, you can make a good profit if you renovate it and sell it on. But bear in mind that this requires a lot more hands-on work on your end.
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The Stock Market
The stock market is intimidating if you have never invested in stocks before, but it’s not actually as scary as it seems. When you buy a stock, you buy a small portion of a company. If you own enough stocks, you may be paid a dividend when the company makes a profit. If the company does well, the value of your stock will increase and you can sell it for a profit. If they do badly, the value will drop.
The key is knowing how to read trends and choose which stocks to invest in, which can be difficult. However, if you invest small amounts of money in safe stocks, you will see a steady return over the years.
Alternatively, you could put your money into a mutual fund. Instead of choosing your own investments, you put your money into a pool with a lot of other investors. Professional money managers then make investments and you get your percentage of the profits. This is a much easier and safer way for novice investors to put money into the stock market.
If you just let your money sit in a savings account without moving it around or doing anything with it, you’re missing a big opportunity. Why not try one of these investment strategies instead?