Regular Savings
The stagnation in interest rates since the financial crisis of 2007 has made regular savings a less attractive investment prospect. At current interest rates, savings may even struggle to keep pace with inflation.
The stagnation in interest rates since the financial crisis of 2007 has made regular savings a less attractive investment prospect. At current interest rates, savings may even struggle to keep pace with inflation.
There are also several benefits to regular savings:
Earning interest on interest or “compounding” means your original investment can effectively snowball over a long timeframe. For example, a £1000 investment earning 6% interest over a 50-year period would grow to be worth over £18000.
This is a way of reducing exposure to falling markets by not investing all your money on the same day at the same price. If you invest in regular small amounts, rather than a lump sum this will reduce your exposure to falling markets and the peaks and troughs of share prices. Obviously, some of your investments will be made when the market is low but these will be balanced out by those at the height of the market. Pound cost averaging can also remove concerns over finding the best time to invest.
Many countries offer products which provide tax advantages to savers such as no capital gains tax on savings in Switzerland. There is a wealth of tax-efficient international savings options for expats.
