I guess one way or the other we all have the chance to save. The question is where do you put your money? Is it on a savings account? Is it on a time deposit? I know someone who puts her money in the cabinet! Most of the time, we park our cash on an instrument which we deem as safe and readily available for us.
Now, let me say that if we park all our cash on savings deposits alone then we are doomed. Why? It is a fact that inflation always beat interest rates. In lay mans term this means that the money on your savings account will have lesser value in time. You put your money on cash deposits, then the bank will keep it safe for you (assuming that it won’t close!). However, they really won’t help you earn a lot from it either. I’m not saying that you should not put your money in bank deposits. Rather, you should place a balance on where you park your money. The rule of thumb is you can put 3 to 6 months of living allowance on a cash deposit while the rest must be placed on the investment of your choice.
We need to make a paradigm shift on our concept on saving. Most of us misconstrue saving and wealth building. The law on inflation and interest rate dictates that saving alone is detrimental for your wealth building process and will eventually eat up your resources in the long run. Because of this, you must never be content on the interest income generated by cash deposits.
If you already have a significant amount of cash sitting on your lap then you must find ways to maximize your returns. You can start by checking out the different investment instruments such as Bonds, Stocks, Treasury Bills, Mutual Funds, UITF, FXTN and even Real Estate. You may even want to put it in a business if you have a calling for entrepreneurship.
Perhaps the biggest obstacle is knowing where to start. Banks nowadays has a special desk for investment accounts. You may inquire with their in-house investment manager and check on the different products that they offer. There are also other financial institutions such as insurance firms and investment houses which have their own product line-up. You may also do your research in the web since products are posted on their sites.
Investing on these products has an inherent risk attached to it. Your portfolio will likely depend on your own personal risk tolerance. As the rule says, the higher the risk - the higher the return. At the end of the day, it’s you who will decide where you’ll put your precious cash.
