Money is tight. This has been true for the average household for a great many years, but happens to be truer now than ever. Saving money is something of a skill, and not one that all possess – but learning how to save properly can mean the difference between scraping through a life of independence or thriving in the long term. What are some simple ways to think about saving?
The first, most essential and most accessible route to growing your money is, quite simply, to save it. There are various savings options available online for you to pick through and choose, but doing so can feel quite daunting if you are new to the world of financial literacy. One of the key things for which you are looking is an interest rate figure. This is a percentage, that illustrates how much you can expect money kept in the account to grow by each year. The higher the percentage, the faster your savings grow.
However, higher rates of interest are sometimes only offered in exchange for limited access to your money. So, if you choose certain savings accounts, make sure you can afford to lock away the money you are transferring to it. There are some specialist accounts that offer bonuses, such as ISAs which can offer tax exemption on interest – though you will not need to worry about this as a new saver, as you will not breach your Personal Savings Allowance for tax-free interest altogether soon.
Even with specialist savings accounts, interest rates can often be somewhat stymied – particularly in comparison to the high rates of inflation currently being experienced. However, there are more active ways in which you can grow your money, and through which you can gain inflation-beating yields; these come in the form of investments.
Investing can be a complex undertaking, even for old hands. The most common form of investment for the average person is in assets, which we will come to shortly. However, there are some simple and relatively low-risk ways that an individual can engage with the stock market, in order to grow their money somewhat reliably.
Investing in stocks means investing in portions of publicly-traded businesses; their successes are translated into stock value, as are their failures. This means that the better a company in which you own stock does, the more your stocks are worth. Trusting your money to one company is extremely risky, but spreading your savings across the entire market – as with a Global Index Fund – can see you grow your money in like with the global economy.
Finally, we come to assets. Assets are often the most efficient way to grow money, if not the most accessible. Property is a perfect example of this, as the performance of the property markets in the last two decades can attest. Rampant inflation-beating growth has enabled domestic property owners to gain 73% in property value. But any asset can be used to these ends, provided there is a market and appetite for them.