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Having the savings stopped generates losses over time. The value of money depreciates year after year, so if, for example, we have 8,000 euros without investing and within ten years we rescue them, our purchasing power will have been reduced by more than 3,000 euros due to expected inflation. If we had moved our savings, they could have reached 20,000 euros.
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To move savings, the first thing to do is … save. Obviously it may not be so much if we take into account that, historically, Spain does not have a culture of established savings. In May, the Bank of Spain gave a touch of attention: for every 100 euros of income, we barely saved 5. Of course, the last quarter of 2019, the savings rate of Spanish households was the highest since 2013 (8 , 7% of your disposable income), according to the INE.
In May, the Bank of Spain gave a touch of attention: for every 100 euros of revenue, we barely saved 5
Once the step has been taken to save, “we must take into account the usual context of a time for this part, with low interest rates because central banks are opting for monetary policies to promote economic growth,” he explains. Manel Álvarez, professor at the Autonomous University of Barcelona (UAB). “But we can find options to obtain profitability from our money.” Everything will depend on the size of the savings and the type of saver, on the risks you want to assume.
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Also, today, thanks to new technologies such as the blockchain, which has allowed the development of automated investment platforms, moving our money is no longer just a matter of professional investors. Here are some options:
The theory: from lowest to highest risk
In the event that we want to assume the lowest possible risks, fixed income is the best option and also offers different returns. This can be public, issued by the State (letters, promissory notes and bonds) or private (promissory notes and bonds). The performance of fixed income securities depends on interest. By offering less risk, fixed income also means lower returns. If it is short term, it means less risk than if it is long, where there is greater volatility.
In the event that we want to assume the lowest possible risks, fixed income is the best option and also offers different returns
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With a moderate risk, there are options such as savings and investment insurance, whose risk will depend on the profile of each product and corporate debt, the fixed income of companies. In savings and investment insurance the risk will also depend on each product and in the less risky, we can recover at least all the money invested plus a small return.
In investment funds and pension plans the risk depends on the type of fund chosen and not on the type of product, because they invest in different assets with different risk. Investment funds allow the saver to behave like an investor, since it can be diversified into different types of assets.
Stock market and equity. You can lose the total investment although, as the saying goes, “the stock market always grows in the long term“
Investment funds allow the saver to behave like an investor, since it can be diversified into different types of assets
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The practice: low interest rates
With the different financial products on the table, now comes the million dollar question: Where am I most interested in putting my savings with such low interest? The positive part of being low is that we can take advantage of them. As the price of money is so cheap, one of the best assets to invest in the long term is equity. This, always with some caution, diversifying into global portfolios and betting on companies that are not indebted.
Taking advantage of the fact that bank loans are so cheap, in the short term, one option is, according to Pere Ortiz, a financial analyst, to invest in real estate: “Buy a house to reform and sell, with which we can obtain profitability around 20- 30% in less than a year. Of course, we will have to have a high minimum capital and we will be exposed to the variation in housing prices, which can cause our operation to fail. ”
Experts also advise keeping a portion of the savings for unforeseen expenses, what the Bank of Spain calls “emergency fund”
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Without a doubt, the safest option for Ortiz is “to buy a house to rent, so that we can achieve a return of between 4 and 6% per year. One of the advantages of this savings option is stability; the refusal, also the initial money to be disbursed ”. Investing in gold is another possibility, since it is a refuge value that can cover complicated financial eventualities.
If possible, experts also advise keeping a portion of the savings for unforeseen expenses, what the Bank of Spain calls “emergency fund”. In the end, it is about applying common sense and following a basic concept in finance: invest that capital that, in case of loss, does not cause economic problems or changes in your lifestyle.
To calculate the cost of having your savings stopped, click here.