Savings in the Netherlands are still growing every year, but due to the low interest rates, investing is gaining popularity. Do you opt for saving, investing or both?
When do you choose to save?
Despite the low interest rate on savings, savings in the Netherlands continue to grow every year. By saving on a savings account, you opt for security.
Your money is safe with the bank, you receive a little interest and you can withdraw your savings at any time. Savings in a savings account are ideal as a buffer for unexpected expenses and if you want to make a large purchase in the short term.
Low savings interest disastrous for purchasing power
A major disadvantage of saving is the low savings interest rate at the moment. As a result, the return on savings is nil. Taking into account inflation and capital gains tax, you can buy less with your savings every year.
If you want to repair something of your return, you can deposit a portion of your savings in a deposit for a number of years. You retain the certainty, but are limited in the freedom to withdraw your savings at any time.
When do you choose to invest?
Due to the low interest rates, investing is gaining popularity. Investing can give you a higher return. We say can emphatically. The higher return on investing is associated with more risk. A negative return is also possible.
You therefore invest for the long term. Your investment is then less sensitive to price fluctuations and the risk of a negative return becomes smaller. If you choose to invest the return you also make you build up capital faster and you can expect a nice final amount.
You therefore also invest with savings that you do not need immediately.
Choose a suitable investment product
If you have decided to invest with part of your assets, it is important to choose an appropriate investment product. Topics to consider are:
- Investment horizon: how many years do you need the assets.
- Investment objective: you are happy to invest with regard to the final amount for your child’s pension or study. With other spending goals you might take a little more risk.
How do you want to invest?
- You invest yourself through a broker.
- If a professional wants to invest for you, choose fund investing.
- As a supplement to your pension, pension saving is suitable and tax-friendly.
- Crowdfunding is a relatively new way of investing. You then invest with a group of investors in private and corporate projects.
Conclusion: by combining saving and investing, you go for certainty and a good return in the long term.