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Investing Vs Saving Money

Setting aside money for your future has always been considered to be a good idea. However when we do set money aside, we have to decide what to actually do with it. Should you do the safe thing and put your money in the bank? Or should you invest it into things like the stock market?

Well that depends. Investing your money into the stock market and having it work for you has it’s advantages.

1. Growing Your Money Over The Long Term

The main advantage of investing into stocks is the long term potential it comes with. In general, if you invest your money in a diversified portfolio of quality stocks or an ETF then you will most likely make a nice return in the long run. If you follow smart stock tips and do your own research there is a chance that you can do even better.

2. Income

Investing your money into the stock market can also bring you some extra income. Dividend paying stocks for example will pay you a small amount of money periodically for each share that you own. As your money grows and you buy more and more shares of stock it can turn into a nice income.

However simply saving your money has its advantages as well.

The first benefit is that you know you will not lose your money. If you invest your money into the stock market and then stocks crash you risk losing it all. However if you invest your money in a bank and the market crashes you will still be ok.

So is it better to save your money or to invest it? Actually it can be a good idea to do both.

Investing your money into something that has long term potential can be a good thing. However it really isn’t something that you would want to start pulling your money out of tomarrow. Having a savings account for immediate emergencies and an investment account for long term goals seems like the best idea to me.

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Written on 29 August 2010 by editor under Get out of debt with No Comments
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Simple Ways of Managing Your Money

Are you living within your means?  Do you know exactly what you are spending each month or are your outgoings escalating out of control?  When was the last time you carried out a financial health check? If your answers are no, no and never then read on to find out some top ways of managing your money!

There are many important responsibilities to take care of as an adult – our health, family, work, friendships, hobbies and home - but how many of us devote as much time to our financial health, as we do to all the other tasks we have to perform?Few of us!Yet successfully managing your money is the basis of your ability to make the most of almost every other aspect of your life.

Why not think about setting aside some time each week to go through your finances and make sure that you are on track for the month?It will certainly be worth the effort and time because you will no doubt find places to save money.

Budgeting

A priority is to lay out what comprises your monthly budget - money coming in as well as money going out.

Incoming

It’s usually easy enough to work out what we have coming in – the list is often a lot shorter than for the one going out!Include your wages or government benefits or family assistance that you receive~Include your wages or government benefits or family assistance that your receive}.  If you have any other regular incoming funds add them also.

Working Out Your Expenditure

Make sure that you include absolutely everything you are spending each month.  It’s often the little things that add up and take us over our monthly budget.  So apart from the big costs such as mortgage or rent payments, food and loans which you will need to list, don’t forget to also include:

* Lunches – (yours, your children’s and your partners)
* Travel
* Magazines
* The quick trips to the corner store
* Birthday Cards and Presents
* Children’s Pocket Money
* Restaurants/Take Out Meals
* Tea/Coffee or other beverage
* Charity Donations
* Vet’s Bills
* Dentistry
* Children’s Clubs and Activities
* Wine/Beer
* Lottery Tickets

Once you have a figure for your incoming finances and one for your outgoings, simply take one from the other to see if you are over or under your monthly budget.  You may be surprised at what you find!

If you are going over your monthly budget you are more than likely using your credit card frequently to pay for extras.  This is OK in the short term as long as you can pay off your credit card debt each month, but managing your money in this way over the long term can lead to your debts spiralling out of control, especially when you consider how much the credit card companies are making out of you.

Look through your list of outgoings and see what you can cut down on or cut out altogether and start taking charge of managing your money instead of it managing you!

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Written on 14 December 2009 by editor under Get out of debt with No Comments
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Saving for a Recession

When fighting your way through tough economic times, it is better to try and face down these money troubles instead of closing your eyes and hoping they’ll go away. They won’t. There are many steps you can do to minimise the impact of the economic downturn, and they must be taken now.

Accumulate funds for emergency savings. It is important to save money in an emergency savings fund where you have immediate and penalty-free access. It is advisable to build up rainy-day savings accounts to a level worth about three months of regular living expenses. The best place to park this money would be in a high interest savings account.

Increase Your Savings. Set up an automatic savings plan. This arrangement enables you to set aside specific amounts of cash automatically transferred from a checking account to savings accounts earning high interest or to a mutual fund of your choice. It is important that the money go into a high interest savings account but remain available. A retirement fund will not do it because this is money you won’t need for quite a while.

Cut spending. An obvious suggestion but it can seem difficult to achieve. Lump into one account all the phones at home (landline and mobile). By bundling your communications you can often get good discounts. It also doesn’t hurt to talk to at least two carriers to look for the best deal. Spend less on your grocery bill by choosing supermarket own label brands, going to markets or joining a local food co-op. Ditch the car and join a car pool or use public transport. If you have two cars and one is seldom used, consider selling the other one. Put all the money you save in a high interest savings account intended for the rainy days.

Reduce credit card debt. When your income drops then you have to cut out non essentials and stretch money further. It does not make sense to shell out your hard-earned money to pay 17 per cent (or whatever) interest on credit card debt. Try to pay off in full the balance due each month; if that is difficult, at least pay much more than the minimum amount. Consider moving from credit to Visa debit

Increase household income. This could be tough to do during the recession. But you can invest some of your time in your skills and make additional money doing it. If you write, or do photography, or are able to do some other marketable skills, you can try freelancing on your spare time. In single income households the partner could try and take on casual or one off jobs for extra income. You could start a small business which might blossom into something bigger once the recession is over.

Understand and use legal tax deductions. Be on the lookout for tax deductible expenses such as education, charitable donations and your home office. Stay organised and strict with logging your expenses and receipts to support tax claims. Put the money saved on personal tax deductions into your high interest savings account.

Revamp your resume. Recessions can lead to more layoffs. It is best to polish the résumé to make it current, in case the need to apply for a new job arises. Condense the résumé to one page, as much as possible. Make it look neat, clean and professional, not over the top. Highlight your relevant work skills and experience.

Don’t wait for the crisis to hit you, get yourself ready now. This will give you a strong sense of purpose even as it shores up your position.

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Written on 30 October 2009 by editor under Get out of debt with No Comments
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Saving Money Faster

Saving money takes time and discipline, but with the right strategy and a good savings account you can reach your savings goals a lot faster than you might think.

Many of the good things in life cost money and saving for big items like cars, boats, or even houses, can take months or years. It is possible to hit your savings goals and get the things you want much faster with a well planned strategy and goals.

Before you begin to plan your saving strategy, you should open a high yield online savings account if you don’t already have one. This will allow you to keep your savings completely separate from the rest of your money and will pay a higher interest rate. Also, if you are willing to leave the money untouched for a certain number of months, or even years, you should be able to get an even better interest rate. There are plenty of savings accounts available, so shop around for one with good interest rates and low fees.

Once you have a savings account set up it is time to set your savings goals. The crucial factors are how much you need to save and what kind of timeframe you have in mind. There are plenty of savings goals calculators online that will tell you how much you need to put away each month.

Do not overstretch yourself. If necessary, establish a longer timeframe so you can save without putting yourself under too much pressure. Alternatively, you could take a detailed look at your personal spending to see how you can save money here and there. Ask yourself if there are some everyday items or expenses that you could live without in order to hit your savings goals faster?

The best thing to do now is create a household budget to get a good idea of all your typical ingoings and outgoings each month. It is better to over-estimate here to make sure you have enough to live comfortably. Any extra money you find yourself left with each month can be moved across to your savings account.

Once you do your calculations and decide how much you need to put away each week/month, there are a few steps you can take to make the process easier. Arrange for direct credits into your savings account from your salary or bank account and treat it as money not available to spend everyday. Another option is to ask your employer if they can split your salary payments to some of your pay goes direct to your savings account each paycheck. This will reduce the temptation to spend and get your money working for you in your savings account as early as possible.

Second, it is vitally important to avoid debt if at all possible. If you have longer term, larger loans then you will just have to factor that into your budget. However, any new debt, and especially credit card debt, should be avoided at all costs. Attempting to save while trying to tackle an expensive credit card debt is like taking one step forward and two steps back.

Reaching your savings goals may seem difficult at first but stick to your plan and the money will start to grow. For longer-term savings goals you may find that your circumstances change during the process and you can save the money even faster than expected.

Tips and ideas from Richard at compareyourbank.com.au which compares banking products including. Visitors can compare products including the best savings account deals and then apply online with the bank.

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Written on 14 September 2009 by editor under Get out of debt with No Comments
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