Tag: etoro

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Is Saving Money not a good option anymore?

From birth we are taught to save money. You go to school, get a job and start saving money in your 20s, or 40s, and by the age of retirement you will have a nice nest egg for the rest of your life. Really, is it possible in 21th Century. First all, increasing inflation and prices are making it extremely hard to save. Your money sitting in a bank maybe at risk for a number of reasons;

What is a free market economy?

A free market economy is basically a market that is controlled by our supply and demand. In a free market, corporation and companies owned by private individual are free to buy and sell their product service and set their own prices, procedure and production strategies.

The most important aspects of a free market economy, is that bank and corporation play a vital role to the success of the free market economy. Thus, anyone wanted to start a business with a unique product or services can rely on the banks to find the best financial strategy or simple lend you money to start your business. In turn the banks will charge fee on each transaction. So, the system of economy continues in perpetuity. From the appearance, it would seem that this idea would give way to a stable economic and stable bank systems.

How did the bank crisis in 2008 happen?

In a nutshell, the housing market boom of the late 2007, resulted in an increase of mortgage backed securities that spelled out high risk loans for the institutions. Reckless lending by banks resulted in an unprecedent number of loan default, which left many banks at the brink of bankruptcy and a governmental bailout was required in some countries to save them. It was an epic financial and economic collapse that cost many ordinary people their jobs, their life savings, their homes, or all three. '> 1 .

Eventually, the housing market recovered after 3.5 years. A lot of buyers who bought in 2008, 2009 or 2010 saw their home prices decrease before the recovery started in 2011. Condos deprecated by only 12%, while single-family homes depreciated by 19% after the recession. (Deniz Kahramaner, Medium, 2018) '> 2 .

If, we have learned anything about 2008 financial crisis, is that no economy system is stable in any country of the world. Anything can happen at any time, that could potentially lead to a cost of living crisis, and could result in, losses of our jobs, savings and Livelihood.

Unexpected World Events

Once again, we find ourselves at a cross roads. Ongoing crisis of covid 19 and the unexpected war in Ukraine, which has blocked raw materials and food resources. In addition to the collapse in global stock market and sliding cryptocurrency values all spell out that we are leading once again into another economical crisis that could have a devastating consequence not only for our future but maybe for the future of our children.

In particular, central banks have lost their nerve. Instead of being a reassuring presence, they are adding to the sense of panic by increasing the cost of borrowing. As one analyst said about the US central bank’s decision to raise interest rates by 0.75 percentage points last week: “The Federal Reserve is going to hike interest rates until policymakers break inflation, but the risk is that they also break the economy “ (Phillip Inman, The guardian, 2022) '> 3 .

So, it is reasonable to keep saving money in an unstable economy. Far worse unstable financial system. The simple answer is no!

What should be do ?

Since saving money in a financial institution is not really an option anymore. Your best bet is to invest your money. Not only will investing your saving produce higher returns on your investment. You will potentially have more than just getting by in your retirement. Here are a few ideas on alternative investments.

Commodities Investment

Due to the war in Ukraine, we are witnessing an increase in the price of oil and in general the commodities are at an all time high, while the stock market is taking a turn for the worse. Although at the moment Oil may seem like a good investment, but as car manufacturers and eventually planes and trains turn to renewable energy. The demand for oil will decrease, if not disappear all together. So, as a long term investment Oil will not be a good option. However, in the short term you maybe able to get a nice return on investment.

Your best bet would be to invest in Gold or precious metals. These types of commodities tend to go up and down based on the performance of the economy. For instance, when there is a downturn in our economic gold tends to increase in value, whereas, when the economy is thriving gold and/or precious metals tend to lose value or stay at the same value. In sum, it is a good investment that can help you where the storm during downturn economical moments.

For more information please click here gold investment information

Rental Properties

Although, the housing market was in part the trigger point of the 2008 financial crisis. It has always been and will always continue to be one of the best investments alternative. By turning your properties into rental properties, this creates passive income. No matter the down or upturn of economy, you will be able to create an income.

Another booming idea, is to invest in long term commercial real estate. Buying a building or retail outlets etc can really enhance your investment portfolio. Locking in tenants for 2 to 5 year lease, means that, no matter what happens, economy crisis, inflation, or down turn of stocks, you have a solid investment that renders you money.

Pension Funds

A pension fund, is a fund or scheme that you can invest in, which will provide you with retirement income. In some countries, they can permit up to approximately 25% tax relief investments into Pension funds.

In most case, you can begin to access your pension as early as 55 years old. Keep in mind the accessing your funds early may have penalizes or other consequences. Please seek help from an financial advisor before making a sound decision.

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Tag: etoro

Is Saving Money not a good option anymore?