Find out the best smart rates for saving money.

The concept of saving money changed during history. Nowadays there are various options that enable the saver to earn interest from their assets. Some options involve some kind of risks and some are risk-free.

 

Regular Savings

Probably one of the easiest options and risk-free methods is using regular savings accounts. Allocating a certain amount each month enables you to save for your goal and get a lower interest. The bank will give anything between 0.01% and up to 5%. The greater the interest rate, it is more likely that the bank will require you to commit for a period of time. Usually, a year or more and some may impose penalties if you need to withdraw before the term.

This example is for HSBC as they are offering 1% interest. And you can see below how much you can save by depositing monthly two different sums.

One key thing to remember is that the interest aspect for the regular savings option is usually threatened by inflation. The UK GOV aims for a 2% inflation but the reality is slightly different. Therefore, if you saved £1000 in 2020, the value of £54 can be considered as lost because greater inflation will increase the cost of living and the bills.

Therefore, it is absolutely important to consider various saving options in order to smart saving and prevail the inflation.

 

Stocks and Shares – ISA

ISA stands for Individual Savings Account. And this is a tax-efficient process of saving money. Investing this way using stocks and shares ISA directs the saver to assume some risks in the expectation for faster growth.

This method is a good response to the increasing cost of living. It can further help beat inflation and prepare for the threat of the tax rises which can be caused by the Covid19 pandemic.

There are various ISA plans as Lifetime ISA, ISA, and Junior ISA. Things to consider when using such products are minimizing the risks. As various providers allow the saver to optimize the plan and select the level of risk. The provider fees are very important and terms and conditions must be analyzed in advance. Lastly, it is extremely important to check out the track record.

Compared to the regular savings plans this method can be very rewarding. But it is important to remember that the risks are greater.

Index Funds

Index funds are ideal for long-term plans. By diversifying the investment portfolio without having great skills. As an example, one of the most known index funds is S & P 500. This index represents the top 500 largest US companies. According to the S&P, the returns for the S & P 500 for the past 3 years are 18.21%.

Index funds are investment funds that track benchmark indexes such as the S & P 500 and Nasdaq 100. When you invest in an index fund, the money is used to invest in all the companies that make up that particular index, offering a more diverse portfolio than buying individual stocks.

Index funds make money by generating returns. They are designed to match the returns of the underlying stock market index, which is well-diversified to avoid large losses and works well. They are known to outperform mutual funds, especially when it comes to low rates.

Crypto Saving

Crypto-saving is so much different compared to regular saving accounts. Most of the crypto exchanges do offer saving options such as flexible or locked savings for a particular period. One of the most appealing aspects of crypto saving is its potential for high-yield returns. Before choosing to invest in such a product, thoughtful research MUST be completed to understand the concepts and the risks.

In the below picture you may see the APY(annualized returns) for the major coins including the same stable coins.

One of the main characteristics of the crypto market is volatility. Thanks to the connection between market capitalization and the transaction exchange. In short, the price of a coin fluctuates on a daily basis. As you can see in the below graph, this provides the returns for the auto-invest function available on Binance for the past 3 years. The numbers are quite wild. But this is thanks to the great market bull rank for the past few years.

There is no guarantee that the trend will continue in this manner. Therefore you should consider using the information provided here. We do not provide any financial advice on the website. More information in terms of reviews, plans, guides for providers, exchangers will follow soon.