Everyone needs to be aware of how to save successfully to meet their specific life goals. We break down some tips to help you maximise your life savings for the big and small moments in life you’re saving for.
Tips on How to Save Successfully
We share five tips to help you get the most out of your life savings plan.
1. Don’t Forget to Factor in Inflation
When you don’t consider inflation when setting up your savings, you could negatively impact your savings. When interest rates go up, you must look at it in conjunction with the inflation rates to assess the full impact on your savings.
So, what is inflation exactly? Well, it’s the rate at which your savings depreciate over time, influenced by an increase in the cost of living, etc. Therefore, carefully consider the interest rate the bank offers you in conjunction with the inflation rate to prevent your funds from losing value.
2. Think Bigger than the Bank
If you want real results, you might have to look elsewhere than the traditional bank. The most important thing to remember is that your investment must grow by more than the inflation every year to achieve real return. When it comes to equities, it’s the only asset class that could potentially outperform inflation over a long term period.
However, it’s essential first to consider what you’re saving for. The potential of higher returns also comes with a risk of losing capital, so consider the term and reason for the investment before you commit.
3. Think Long-Term About Your Savings Plan
Don’t be surprised if you see a short-term savings plan underperform. Many investors make the mistake of selling as soon as they notice this. However, you could be missing out on a large chunk of your return in unit trusts.
When making decisions about your savings strategy, you should not let fear caused by market fluctuations guide you. Instead, you should only consider your personal circumstances and capital capacity.
4. Take the Time to Plan
When it comes to a savings strategy for big life goals, like saving for your child’s education, the sooner you start, the better. Not only will you have more time to save, but you’ll also give your savings plan time to allow your money to work for you.
5. Avoid the Debt Trap if You Can
When we don’t plan, we tend to resort to credit to help us meet our savings goal. Remember that, even though compound interest works for you when you invest, this same strategy works against you when you have a loan, as the total amount you have to pay back will snowball over the time it takes you to pay it back.
6. Hand it Over to an Authorised Financial Service Provider
Because there are so many factors that could influence (whether rationally or irrationally) your savings behaviour, it’s always best to put your savings in the hands of professionals.
With a more balanced and informed opinion of the market and its developments, you can trust them to make the best decision to get you to meet that savings goal.
Start Saving Successfully Today
When you work with an authorised financial services provider, you can ensure that they will use all the latest information and factors to consider to help you get the best results for your life savings plan.