One of the most unsettling things about the global financial system is the fact that it’s essentially an ongoing experiment. Even the most financially sound among us will concede to the existence of vast imbalances and inequalities which only seem to be worsening, however comfortable our own financial situations may be. Even if you’ve held down a long-term job that has blessed you with a consistently solid salary without fail, the ongoing experiment that is the global financial system will inevitably have you wondering if your daily approach to your finances is enough.
One of the emerging dynamics of an ever-changing, ever-evolving global financial system (with local implications of course) is that it is no longer enough to put your surplus earnings away in a savings account. Merely saving your money is no longer enough. Any money that comes into your possession either has to be spent or some of its value gets eroded, even if you have it tucked away in an interest-earning savings account. The reason for this is inflation, which is higher than any interest you’d earn from placing your money in any regular savings account. It would otherwise have been okay for many of us if the money you put away in a savings account at the very least retained its value, but that isn’t the case anymore. As a result, the old adage of working hard, living within your means and saving for a rainy day simply doesn’t cut it anymore. Investing is the new saving and putting your money to work through investments is fast growing into a necessity as opposed to an optional luxury. Unless your annual salary increase consistently manages to beat inflation, you simply cannot afford not to invest your surplus cash. Even if your annual salary increase does beat inflation, there’s still the small matter of job security, which is also not quite what it used to be. What if the company you work for is forced to downsize and subsequently needs to effect some unavoidable retrenchments? Employees are always the first to go in such situations and savings alone won’t be adequate to suitably sustain you should it happen.
Fortunately, many consumer banks and other financial services providers are aware of the need for their clients’ growing need to get more out of the money they entrust them with. Consequently, a range of wealth management products and services are increasingly being made more accessible. It’s in some instances as easy as enquiring about the alternative options you have to merely putting your money in a savings pocket. Your bank or financial institution providing these services will invariably have a wide range of investment options to choose from, with each of these bearing various risk factors. Bigger risk would be tied to investments such as trading the Forex markets, while steady, longer-term growth for your invested money can be attained through bonds or structured products and the like.
Either way, it’s no longer an adequate step to try and protect and grow your money through saving alone.