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The best ways to save money

Finance & Money

Posted on Thursday, July 30, 2020

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Saving sounds easy enough, right? You put a certain amount into a savings account and that’s it. Keeping your money tucked away in a bank account may seem like the best idea, but there are far better ways to make your money work for you.

Here are a few of the best investment options and tips to help you maximise your savings.

The stock market

Investing in the stock market may sound old-school, but it’s still a great way to grow your money. It works like this: when you buy stock from a company, you will own a small part of the business. This means that when the company profits, you are paid a portion of the profits in dividends.

This is based on the number of stocks you own. When the value of the business grows over time, the value of your shares will grow too. You can either cash in your dividends or sell them at a later date for a bigger profit when the company’s value increases. It’s important to note that stock prices fluctuate and there are some risks involved. Speak to a financial adviser before taking the plunge.

 

Mutual funds
A mutual fund is an investment product that pools money from a group of investors to buy items like bonds and stocks with the aim of maximising on returns. Rather than you having to buy single stocks, you can buy multiple ones in one purchase. Although this option has benefits such as convenience and fair pricing, keep in mind that mutual funds usually have a manager who charges a percentage-based fee.

 

Property investment
You don’t have to be rich to invest in property, and if you decide to put your savings towards buying property, there are quite a few benefits. For example, there can be immediate returns (profit) on property investments, such as monthly rental income. And over time, rent can rise when the property market does too. And should you decide to sell your property someday, you could gain from long-term return on the property if it appreciates (increases in value).

 

Investment bonds
A bond is a loan made to a business by an investor. For example, if a business needs money, it will sell bonds to investors. The investors will purchase the bonds by lending the business the money they need. In return, when the business makes a profit, the investors will get the money they invested back, but with interest. This means you would get more money in return.

 

Employee retirement fund
If you’re on a tight budget, a good option is to invest in your employee retirement fund. This usually involves contributing a portion of your monthly salary. One of the biggest perks of an employee retirement fund is that your money can grow without being taxed in the fund. This means you will only be taxed when you withdraw from the fund one day when you retire. If the company you work for contributes a percentage to it and you opt for an auto increase on your contribution over time, this would be even better for your pocket.

 

Get started with professional help
Although these options may seem complicated or intimidating, remember that you don’t have to dive into all these options at once! Speak to a financial adviser who can help you decide on the best option to suit your pocket.

 

The information in this article is for information purposes only and does not constitute professional advice.