Savings And Risk
Posted by Allison on 1 April 2009, 16:28
How comfortable are you with risk? When it comes to investing your money, do you like to stick to savings accounts that are as safe as they come? Or do you invest your cash in stocks, shares and riskier propositions?
We all have a different opinion on this of course, but for some the idea of risking their hard earned cash to try and earn even more just isn't for them. They would prefer earning a smaller but guaranteed amount, instead of trying to go for bigger money.
The question is where do you sit in all this? And are you getting the best return for your own currency that your comfort level will allow you to get?
The point is that there is nothing really wrong with sticking to the safe options. You may have perfectly good reasons for doing so, and provided you are good with your money and you know what to expect from the decisions you have made you are in a good position.
The problems start when you carry on putting money into accounts that are no longer the most competitive ones out there. For example, if you open a savings account now you will probably take the time to look for a good one that has a competitive rate.
But that account will have a limited lifespan as the best one on the market. And if you stick with it indefinitely you will find that the interest rate for that account will go down as it is replaced with a newer and better account.
And you can be pretty sure that your bank or building society won't tell you about it.
In short, it's up to you to make sure that your money is in the right place. And the best way to do it is to check the information that is widely available on the internet, in order to be sure you are getting the best deal which appeals to your level of risk taking.
One of the best sites for this purpose is called Money Saving Expert. Not only does it help you save your cash it also gives you the best and most up to date advice on making sure you can make the most from the money you have. There is one particular section that deals with savings accounts, and you can read it here - http://www.moneysavingexpert.com/savings/savings-accounts-best-interest.
If you keep it bookmarked you can check it regularly to see whether the account you have is still holding up.
Of course it could be that your acceptable level of risk changes as time goes on. You may be happy with a higher level of risk to your savings at the moment, but in a year from now you might have changed your mind.
That's why it is always a good idea to check whether you are committed to any particular investment plan for any length of time. If you think you may want to make changes at some point, you will need to see if you can do that within the terms of the agreement. Savings accounts are easy to change, but some with better returns may require a longer 'lock in' time. Always be sure to check.
In the end it is up to you how much you want to make from your investments, but the more you want, the bigger the risk will be.