What is the best way to invest your savings?

Have you saved a nice amount and are you looking for a good investment? In this article we look at how you can best invest your savings so that you can achieve a good return on your hard-earned money.

Why invest your savings?

It is certainly wise to have savings. You can always face unexpected expenses and by having savings at hand you never get into trouble. Taking out a loan for an expense is never a good idea because of the high-interest rates.

At the same time, it is also a shame to leave large savings balances in your account. Low savings interest rates and high inflation mean that your savings will only go down in value. It is therefore smart to invest part of your savings. But what are the best investments for your savings?

How many savings do you have?

What the best option is for your savings also depends in part on the amount in your account. Whether you have a thousand pounds or a million makes a big difference. It is smart to spread your risks as much as possible: this is easier with a larger amount. You can then invest your money more easily in different investment categories.

Before you start investing your savings, it may be smart to draw up a plan. Determine your risk appetite and use that as a basis for deciding how you want to spread your investments over the various investment products. That way, you will achieve the best results.

Investing money in shares

A good way to invest your savings is by buying stocks. It is important to spread your savings over different shares. That way, you avoid losing a large part of your money because one share performs badly. If you want to minimize the risks, it is best to make sure that you:

  • Invests in different sectors.
  • Invest in different regions.
  • Invest at different times.

It is important to spend sufficient time selecting shares. In general, stocks perform well in the long term: over the past 100 years, the annual return has been between 6 and 8 percent. However, individual shares can do much better or worse. Therefore, examine whether the company’s ideas can continue to work well in the future and whether the company can keep up with the competition.

If you want to invest in stocks without paying commissions, you can choose eToro. At eToro you pay no commissions, so you can also invest with a smaller investment amount. Use the button below to directly open an account at eToro:

Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees.

Investing your savings in ETFs

If you have limited savings and still want to benefit from the price movements on the stock exchange, you can choose to invest in ETFs. An ETF is a passive investment fund that is traded on the stock exchange. This sounds more complicated than it is: in simple terms, an ETF is a collection of for example shares in which you can invest

An ETF may contain stocks listed on the AEX or the FTSE, for example. By buying the ETF, you can profit from the average increase of that index. Investing your savings in ETFs has its advantages:

  • You immediately apply a good level of risk diversification.
  • You do not have to make any difficult decisions.
  • Furthermore, you can invest your savings at relatively low cost.
  • Perfect for building up assets.

The best way to invest in ETFs is by periodically depositing a fixed amount. That way, you can still make the most of your savings with a minimum investment! A good broker where you can buy ETFs is DEGIRO. At DEGIRO you pay no purchase or sales charges when you buy ETFs from the core selection. Use the button below to open an account at DEGIRO:

Active speculation on the stock market

Are you not afraid of excitement and do you want to try and make the most of your savings? In that case, active speculation may be the best investment for you! By actively speculating, you can capitalize on the latest upward and downward price movements. With speculation, you can also open short positions: you then achieve a positive result when the price of the security falls.

You can also use leverage with active speculation. This allows you to immediately open a larger investment position with a small amount of money. It is not advisable to invest your entire savings in this investment option: the risks are too high for that. If you are keen to learn and you enjoy being actively involved in the stock market, active speculation can still work out well.

A great place to try active stock market speculation with a demo is eToro. Use the button below to instantly open a free demo at eToro:

79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Get the most out of your savings

Do you still want to keep a (large) part of your assets in a savings account? In that case, it is wise to at least get the most out of it. With some savings accounts you receive no interest at all, while with others you still receive a minimal interest.

A good platform where you can compare interest rates is Raisin. Raisin is a website that lists the various savings products of foreign banks. This way you can always see right away where you can get the highest return. Would you like to try Rasin yourself?  Use the button below to visit the Rasin site directly:

best savings investing

Putting your savings in real estate

When you have saved up a considerable amount of money, it can also be interesting to invest in real estate. For example, you can buy a small flat and rent it out for the long term. That way, you build up a steady income with your savings.

The good thing is that you can also use leverage here. You can borrow part of the money from the bank, so you don’t have to pay the full amount immediately. Real estate investments do take more time than stock market investments: you need to find tenants and maintain the property. Keep this in mind when you start investing in real estate.

Alternatively, you can put your money in shares of companies that deal with real estate. You can also choose to invest in a real estate fund. Always investigate the risks well and determine whether the properties are in a good location. This is often extra important when you invest in real estate.

Investing in loans

You can also choose to invest your savings in loans. Both companies and consumers constantly need money and if you have savings that you are not using, you can help these parties. It is of course risky to lend out all your money at once to a relatively unknown party. Fortunately, there are platforms that make it possible to reliably lend your money to various parties.

A good example of this is Mintos: on this platform you can easily receive more than 12% interest. By using the automatic algorithms, you can spread the money you want to lend over different parties. Please note that lending money is certainly not without risk: if you are prepared to take risks, this way of investing can be interesting. Use the button below to open an account immediately:

Do not forget about your debts

Do you have many savings, but still have outstanding debts? That is a real shame! The savings interest rate is almost 0%, but the interest on loans certainly is not. It is therefore definitely advisable to pay off your debts when you can. The best investment is therefore always a paid off debt!

Insulating your home

Another less obvious investment is to insulate your house. By properly insulating your home you can make significant savings on your energy costs. The return on good insulation is therefore certainly positive, and it also increases your living pleasure. According to a study by milieucentraal, insulating a cavity wall in a middle-sized house costs approximately $800, but you will earn this back in three years thanks to the average savings of $260: an annual return of 33% is not bad!

You can also make your house more sustainable in other ways. For approximately $5000, you can install ten solar panels which will pay for themselves over a period of 8 to 10 years. Not a bad return when you compare this with the results you normally achieve on the stock market!

house preservation

Cryptos

More and more money is being printed: investing in cryptocurrencies such as bitcoin and Ethereum can therefore turn out well. However, it is important to be careful: you can certainly make a big hit by investing in cryptos, but there are absolutely no guarantees. The chance of losing a lot of money is quite as big.

Do you want to learn how to invest some of your savings in cryptocurrencies yourself? Use the button below to read our special on this topic:

Pay off your mortgage

The mortgage interest rates are a lot lower nowadays. If you have paid off a mortgage a while ago, the interest rate can be a lot higher. By paying off your mortgage, you reduce your monthly costs, and you have more money left over for fun things. So, paying off your mortgage can also be a smart idea for investing your savings.

Save or invest?

When you have little assets, it is always best to save your money. However, when you have many savings, it is also wise to invest some of it. Use the button below to read more about the differences between saving and investing:

Conclusion: what is the best way to invest your savings?

The answer to this question will be different for everyone. For some people, for example, it is much more important to experience a feeling of security: they would rather put their money in the bank than run risks on the stock market. For others, it is more important to build up wealth and shares are a good method to do this.

You can also think out of the box and, for example, pay off part of your mortgage or make your house more sustainable. By looking at ways to reduce your fixed costs you can also achieve a positive return on your savings. We are curious: how do you prefer to invest your savings?

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Author

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About

When I was 16, I secretly bought my first stock. Since that ‘proud moment’ I have been managing trading.info for over 10 years. It is my goal to educate people about financial freedom. After my studies business administration and psychology, I decided to put all my time in developing this website. Since I love to travel, I work from all over the world. Click here to read more about trading.info! Don’t hesitate to leave a comment under this article.

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