SAVINGS AND INVESTMENTS
TYPES OF INVESTORS
TYPES OF INVESTMENTS
It’s common knowledge that we should start if we’re not already saving for the future. There are several theories about how to handle money properly in the future. There is also the possibility of expert advice on the given topic. You don’t even have to think about expenses with many financial advisors! Therefore, it is not harmful, and it is not a shame at all, to get advice from an expert.
The areas of saving and investing often overlap. In the beginning, there is always the idea of financial security for one’s future. There are four main types of savings that you can think about.
First of all, it is a reserve – it is money that you have stored in case of unexpected life events, for example, if you lose your income or part of it due to illness or injury. The reserve should correspond to at least the amount of your six-month income. You must be able to access this money at any time.
Another savings option is short-term savings. You set a goal that you plan to achieve within three to six years and calculate how much you need to set aside each month to achieve this goal. Short-term savings cover the purchase of a car or a vacation.
As for savings, after all, it’s good to think about long-term goals as well. Long-term savings cover plans for the future. If you want to start a business one day or buy a cottage in the mountains, you will probably need these savings! It is mostly about saving up to ten or twenty years.
In this case, it is not advisable to deposit the money in a current account but in a savings or investment account, which evaluates the deposited income advantageously.
Last but not least, it is important to start thinking about your potential situation at retirement age as soon as possible. Regarding pensions, it should be remembered that each state can provide only a limited amount of money, which depends on the population’s productivity. Since the Slovak population is ageing and inflation is increasing, you have to think about other ways of co-financing your pension. In addition, a few simple steps can help you in the future when granting a retirement; for example, you can establish a second and third pillar.
Your employer automatically contributes to the second pillar. Establishing it as soon as possible is advantageous because it will not burden you financially, but this money will be added to the final amount of your pension.
Setting up the third pillar is good if you have a steady income from which you can save a particular part. There are several options for the third pillar. Almost every bank provides them. In each one, she willingly explained how it works for them.
Savings in both pillars are hereditary and, therefore, cannot be forfeited to the state. They will always return to your loved ones. In our podcasts, you will learn even more about specific types of savings and how to set them up and proceed.
It is not easy to learn to save with your resources, but it is crucial. You can find a few tips for good savings, for example, in the article Why does saving hurt? Nine tips on how not to waste money and treat yourself to a prosperous future or 10 tips on saving on weekly expenses.
Various online tools will help you set up your finances. They are, for example, a budget planner or a savings calculator. You can also calculate the amount saved with regular deposits or a one-time deposit to a savings account. There are many tools; you just have to find the one which suits you the best.
52-Week Savings Challenge
Saving can be hard sometimes. That’s why we’re bringing you a fun way to get started with it. Do you know the 52-week savings challenge? The premise of this challenge is to save a certain amount every week. If you follow this habit, you can save up to 1.372€ per year if you save the total amount. You start the 1st week with 1€ saved, but you can also use the half option, i.e. 0.50€.
How to do it? You can start in the standard way, i.e. you save 1€ in the first week, 2€ in the second, and so on until week 52. With the saved amount, you can paint one container. Or you can go for it according to your available resources. For example, if you save 25€ in the first week, you will paint a container corresponding to the given amount. Our worksheet, which we have prepared for this challenge, can help you.
Investing money is quite a complex topic. If we look at what investing means, we will find that, in short, it is about putting your own funds into something that will positively evaluate these funds and bring benefits. You can invest your money in various things – starting a business, buying real estate, etc.
How to Invest
Before the internet, investing was exclusive, only for wealthy people or stock market brokers. Nowadays, everyone can invest. Even if you don’t have much money, you can start with small investments now. Make sure beforehand that you have some extra money set aside for unexpected expenses and that you have no outstanding debts.
Four principles of investing
Types of investors
Types of investments
When investing, a person can make many mistakes, the first and biggest of which is impetuousness. You can find some tips for investing in article 10 rules of investing.
Several podcasts and blogs will help you become more familiar with the world of investments. We recommend, for example, the podcasts Inteligentné Investovanie or Som Investor and the Finax blog.
You can listen to the Index podcast and browse their website for a broader view of the economy. We also recommend regular money talks under the MONEY TALKS podcast.
You can also listen to our podcast with finance expert Ivana Mikitová.
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