Keeping money for a long time in the form of cash is not the best idea, as cash depreciates due to inflation. Thus, to avoid losses, it is recommended to use financial institution products to save and sometimes, to increase savings.
The best option would be to have a percentage of your income in a savings account and keep the rest in other types of investments.
How to choose where to save your money
Choosing where to save your money is a conscious decision that needs an approach as careful and serious as buying a car or an apartment. The decision will be easier if you are familiar with the history of the institute: the key events, the long-term vector of development, changes in the top management and among shareholders.
This information can also be found in public sources. The views and opinions of independent auditors, opinions and reviews of experts, analysts, and reviews of financial and analytical companies for investors would be helpful.
Keeping money
The main purpose of saving accounts is to keep money safe from inflation. In fact, if your money lies in the account without interest, it is the same as if it were lying under your pillow. It will surely depreciate, losing its purchasing power. Depreciation will take place gradually, in line with inflation. Depositing money will help you to save your money.
The main thing is to choose the right bank and deposit rates. The golden rule of saving is to open a deposit at an interest rate above inflation.
However, traditional banks are in no hurry to offer such conditions, but saving with Cashero can give you an industry leading APY of up to 5% on average, some additional upside potential.
The best option is to diversify your investments, i.e. put part of your money in domestic investments, part in forgein currencies, and some in precious metals or mutual funds. If something goes down, the rest of the investments are there to offset the losses.
A financial cushion
The first human need is the need for security. This want is reasonable, we want a sense of control and contentment in life. But none of us is immune to the crisis as the year of 2020 showed.
A lot of people live by the principle “from paycheck to paycheck” without putting aside money for a cushion. What actions will a person without any savings take in case of a salary delay or worse, a layoff? A person in a fit of fear and stress can make bad decisions that will lead to large losses.
That’s why you must be prepared in advance for tough times and put money away in a non-urgent savings account as early as possible.
To do this, you need to aggressively cut your expenses until you accumulate the right amount that can cover at least a year of your expenses. It’s most convenient to get in the habit of saving monthly or a couple of times a month.
With most financial institutions you can now set up automatic transfers of a certain amount or percentage of income to a savings account.
Deposit
Once you’ve saved up a safety cushion, you shouldn’t keep an excess amount of money in your savings account, because traditional banks are not a good financial tool for growing money.
While annual interest can provide a small extra amount, it rarely outpaces inflation. In the worst cases inflation can exceed your interest income.
Summing up, a bank account is a good tool for holding money that will give you confidence for the future. If you are thinking about how much money should I keep in my bank account, you now know that this amount should cover at least your expenses for 12 months. But if the purpose of your contributions will be to multiply your money, it is better to look for other instruments which will be more profitable.
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As of the date of publication, the information contained on this page is deemed to be factually accurate for all terms of conditions, features, and fees. Changes made to Cashero’s terms of conditions, features, or fees after the publication of this content may not be accounted for.
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The Cashero App is now available for download in both the Apple App Store and Google Play Store, though not all features are currently functional. Cashero has not yet officially launched.
