A savings fund (or a savings plan) is a perfect tool to double your money without having to move a finger. Or as they say, almost without disheveled. Let me tell you.
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And before continuing I would like to make a couple of considerations:
On the one hand, all I am going to tell you here is not any financial theory coming out of the books or the academic world, but something practical that I personally apply and that, therefore, I tell you first hand, with knowledge of cause.
On the other hand, it can be carried out by anyone of any age and economic level; nevertheless, many better results are obtained the younger you are, since time plays in favor. The more money you have too, but this is an obvious thing that applies to everything ?.
What is a savings plan? What is a savings fund?
That said, a savings plan is simply the decision you make to save money to have it available at a certain and future time (when you retire, when your child goes to college, etc.)
The savings fund goes one step further and involves investing that periodic money, as it accumulates, in a financial product that produces a certain return. Such profitability, when it occurs, is accumulated to the principal (the initial and the periodically contributed) to continue producing more profitability, which in turn is accumulating to the principal, and thus indefinitely or until the moment you want to rescue it.
As you may have guessed, the savings fund is based on the theory of compound interest or snowball, which means that the interest produced accrues to the principal and produces new and greater interest. For this reason I said at the beginning that the younger you start the better, the bigger the ball becomes because you have more time.
Important considerations with savings plans and funds
First.- Even if it does not produce any profitability, it is good to make a savings plan because it forces you to save. Many times we don’t do things, even if we want to, if they don’t force us. So create the obligation, and better yet configure it automatically as I will tell you later, it is the best to force you to save.
Second.- you going apuradísimo and do not get to make ends meet and you’re not saving, because that’s rich? Error. That is for all those who want to save because being able to do so, be it more or less. Set aside what you can, even if it is very little. If you cannot € 100 per month, set aside 50, if not 20, if not 10, but 5 … Whatever you can. A trick if you can almost nothing: contribute very little, even if it is insignificant, and see it increasing proportionally, every month, every year … as you can.
Third.- There is no obligation to keep the fund for a period of time X, you can withdraw it whenever you want, but you must be aware that this is a long-term savings mechanism. The best benefits can begin to be experienced as of the tenth year, approximately. Therefore, if in a couple of years you will need the money it may not be the best strategy for you. You will have saved, you will recover the money, but little profitability you will have received.
How to hire a savings fund?
There are several possibilities to get a product of this type. Remember that it is about saving money so that it produces a return that you do not withdraw and that accumulates to the principal successively. Hence the importance of saving and investment …
This is the most classic assumption, valid for the most traditional. You go to your bank for a lifetime and tell him what you want to do. They make you look pretty, they sit you in a chair, they give you a pen and a candy and they tell you what products they have for you to choose.
Personally I see some inconvenience to this option:
- The fees and expenses of traditional banking are not few.
- They will try to sell you the product they want without necessarily having to match the one you want. If they receive orders from their central office that they have to place an X product, then they will endorse you. What in the future do you complain about and say you didn’t want it? Yes, if you wanted it, what happens is that you don’t remember ?.
- Finally, they are not the ones with more knowledge about the subject.
The second assumption is that of unconventional banking but specialized in investment. An example, Income 4.
In this case the commissions and expenses are something more favorable to you, although it is not that they are the panacea, and yes, here we are already very specialized people who will give you the choice between a wide range of products.
Now, is it necessary to have such a wide range of products to choose from? Personally I am overwhelmed by so much infoxication, and in fact the reptilian brain (which is the one in the human being) tolerates a maximum of 3 purchase decisions. From there, it blocks and does not react.