5 Tips for Investing your Savings

this post answers the following questions
1. How to look for variable interest rates investments that have a floor?
2. How a state and regional bank helps me with my investments?
3. How can a savvy investor help me with my investments?
4. Is lending good option for investments?
5. Why look for long term fixed rate investments?

In the wake of the Great Recession, more people than ever are saving more of their income. For the savvy investor, knowing this bit of information can actually help to make more money on his or her expendable income. However, to truly take advantage of the increase in public sentiment for saving, there are a few things that you should consider.

Below are five tips for investing your savings in a world of higher saving

1. Look for variable interest rate investments that have a floor

When the savings rate goes up, many banks and other financial underwriters will lower their fixed interest rates to a point that it is no longer advantageous to consider a fixed interest rate investment. However, many people do not like the market exposure that they receive with variable investments. The solution is to go for a hybrid investment such as an annuity that has a variable component with a fixed interest rate for that it can never drop below.

2. Turn to state and regional banks

When people increase the amount of their savings, they usually do so with the large multinational banks, leaving out the state and regional banks. This means that state and regional banks will often have higher interest rates in order to attract more customers. You can obtain higher interest rates by simply switching your bank, and often state and regional banks will be the only fixed investments that have interest rates above inflation.


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3. Invest in businesses

The savvy investor will find businesses that are conducive to more conservative investing environments. These are usually businesses that have to do with staples and foodstuffs, as people will not be spending money on luxuries like jewelry and restaurant outings or vacations. The businesses that will succeed will be businesses that provide services that people need in a situation of storage. This has been historically proven, and a derivative investment in these types of businesses usually pays off well in an environment of high savings.

4. Peer to peer lending is a good option during periods of high savings

When people say, they often do so to find an outlet in their own businesses. They will then use the savings as collateral for loans that they will then use to start their business. If you can lend money to people who have cash as collateral, you can assure yourself a high return that will definitely outpace inflation. Be sure to note those businesses that are invested in staples and foodstuffs rather than in luxuries, as detailed in the table above.

5. Look for long-term fixed-rate investments

Even though short-term fixed-rate investments such as checking accounts and savings accounts will not outpace inflation in an environment of high savings, many longer-term investments will. Look for certificates of deposit, money market accounts, annuities and even individual retirement accounts that you can leverage for higher interest rates over a long period of time. These investments provide the most security for conservative investors that do not wish a great deal of exposure to the market.

Darren is a Frugal Living and Savings Expert from Sydney, Australia. He says that making the right investment choices is critical to your long term financial stability. If you are having trouble with saving and investing, Darren recommends seeking professional advice from Kelly+Partners.

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