Despite the growth of financial literacy in the world, many people were not prepared for the difficulties caused by the spread of Covid. Many people were on the verge of poverty, others did not have savings by the beginning of the pandemic. Those with savings have quickly spent them, while the luckiest ones turned out individuals with a financial airbag large enough.
If you do not have a penny of savings now, you need to find a way out of this situation. Unfortunately, not everyone knows what can become a solution.
If you have some money set aside, what can you do with it? Banks offer low-interest rates on deposits. In our article, we will tell you how and where to invest and why you can stop in the stock markets RoboMarkets if you do not have much capital saved. A few minutes of reading will improve your financial literacy!
Why Is It Better to Invest as Soon as Possible?
Savings on hand make many people think about multiplying them. There is also the question of how to safely store your money. Keeping money at home under your pillow is dangerous. On the other hand, a bank safe is not very profitable, because inflation can eat funds up. If you think that a deposit is a great solution to the problem, we hasten to upset you. Today, it is not the best time to deposit your money since interest on them continues to fall in all countries of the world. And the frequency of bank collapses is growing.
What is the reason to invest?
1. Get passive income.
If you regularly save and invest money, you can create capital that will generate passive income in the form of coupons or dividends.
2. Save up for a big purchase.
Investments can generate income higher than the profitability of deposits; so, they are one way to save up for housing, a car, a child’s education, or another valuable purpose.
3. Ensure a comfortable life in retirement.
To have the possibility to lead a usual lifestyle in old age, take care of your future today with the help of long-term investments.
Investors: Who Are They?
Do not think that investors are big businessmen and financiers as is often shown on TV. Statistics indicate that most real investors are ordinary people: they still go to work, raise children, and are fond of lots of things besides finances. Investing is just another source of income for them and a way to secure a comfortable retirement.
Where to Start Investing Money?
There are many options of how you can invest your savings, but we will tell about the most reliable and profitable ones:
The main benefit of investing in currencies: it is a very simple and understandable way. Currency can be kept on deposit. When the price rises, sell it and receive interest.
Disadvantage: exchange rates are unpredictable. There are many countries with unstable currencies, such as Turkey and Russia. In addition, foreign currency deposits have very low rates.
- Real estate
Advantage: it is a relatively simple investment with minimal risk.
The disadvantage of such an investment is a long payback period. It takes up to 20 years, with a rental yield of only about 4-5% per annum.
Plus: the yield is guaranteed. This is the most convenient and safest way to invest money since the majority of small deposits are insured by states.
The minus of such an investment is that the return on deposits, as a rule, does not exceed inflation, and, in most cases, it is lower.
Benefit: the potential return on securities is higher than on deposits. It proposes a wide range of instruments, from low-risk with moderate returns to high-risk with possible high returns.
Drawback: profitability is not guaranteed – you can go into the red, especially if you invest in high-risk securities.