Does your savings make any sense?
If you have saved money, you would like these to yield and increase. Having your money sitting in a savings account is pretty safe because you do not risk the value decreasing as they could do when you have them invested in stocks or funds. There they are safe and you make money on the interest rate. But when the interest rate is very low, the return is also not much to hang in the Christmas tree and then you can ask if there are no better alternatives.
Since interest rates are so extremely low right now, it is not much to get into savings accounts at the moment. Most people have very low interest rates and perhaps almost no interest at all in some cases. Although one looks around for sensible savings accounts, there are unfortunately not so many to find. If you do not want to tie up your savings for an extended period of time, there is often only a couple of percent interest.
Where should you make your savings?
When the savings money is in a regular savings account and which usually gives a couple of percent in interest income, it might be time to start thinking about something better. There is always a slightly greater risk of investing their money in some form of investment where the value can go down, but there are clearly safer and more stable stocks and funds to choose from, where the risk is quite small. So it might be an idea to turn your eyes to new forms of savings and maybe even double your return.
A good tip is to invest in mutual funds. There are different types of funds to look at, such as equity funds (which invest in a variety of stocks of varying types), fixed income funds (which invest in securities such as bonds) and mixed funds (where you invest in both equities and other interest-bearing securities). with several. Equity funds have a slightly higher risk because equities are a little more uncertain, but the advantage is then the chance of a slightly better return. Fixed income funds are usually a fairly secure investment but with a slightly lower return.
Recently, Claes Hemberg, savings economist at Avanza Bank, recommended high-yield funds as an alternative to savings accounts with low interest rates. High-yield funds typically invest mainly in corporate bonds, either with longer or shorter interest rates. This is a fund with some risk, but you can also expect about 3 – 4 percent interest instead of 1.5 – 2 percent that you might get in your current savings account. That’s a nice increase. However, Hemberg also says that you probably cannot expect this high interest rate on the high-yield funds for more than one or two years at the most since it is affected by the repo rate (which will not stay at this low level forever).
For those who feel the craving for a slightly higher return and a little higher risk, there are many equity funds to choose from. Of course, you can invest in shares yourself – there are a lot of alternatives that have little risk and where you invest in the longer term with a slightly more modest return target. If you feel that you are a little too uncertain about how to invest your money and want to spread the risk a little more, a mutual fund can work as these invest in many different shares and there are also fund managers who hopefully are good at choosing shares and whose jobs it is to get the fund going well.
Save in shares instead of funds?
Investing in shares is good, but can of course also be bad if it does not go as desired. When investing money, you obviously want them to multiply and to get a good return. However, shares can go both up and down and there is always some uncertainty, even if you think you are knowledgeable and know what signs to look for.
You should always be aware that there is a risk of losing money if you invest in shares, but as I wrote earlier, there are quite a few alternatives where you can invest in fairly safe stocks and get a decent return in the slightly longer term (and that you can make money if you know what to do). If you want to make money quickly, the risk is also greater. However, if you want to tie up your money for a few years, it usually won’t be that dangerous.
Shares are an option that is always available if you dare. Funds are usually safer but usually do not offer as much chance of high returns. You can choose to invest in shares, but it is usually better if you are read and interested and follow the stock market properly. If you do not feel at home or want to spend that time / work, you can still invest some money in shares but funds are a better and safer alternative.
Pay off on the mortgage?
If you have a lot of money saved, you can pay extra on your mortgage to reduce the interest cost. What you should consider in this situation is that the profit you make in saved interest costs must be greater than the profit you can make by investing your money in something like funds or shares. If you can make a bigger profit by investing your money than you would in saving on the mortgage, you should not do this. The mortgage is a very cheap loan, especially now.
Given that mortgage rates are at a very low level at present, it is not likely that you will be able to earn more from paying off your mortgage than investing the money. Admittedly, you do not get much interest on a savings account, but if you can invest the money in something else, such as funds that we have written about above, it is probably a better alternative. However, in other situations when mortgage rates are high (which they will probably be sometime in the future), this can be an alternative to consider once you get your hands on a larger amount of money.