BY JOHN ELLIS, FINANCIAL ADVISOR
Do you save? Are you religiously setting aside a certain amount each week/month toward a financial goal?
People save money for a variety of reasons. Emergencies, such as a medical or car repairs. Buying a house, starting a business, or retirement; for education, travel, new furniture or appliances, or to invest in stocks and shares, property or other opportunities.
But with rising inflation and rocketing cost of living expenses, many think that saving is not viable because, with low interest rates, their money is not earning enough to beat inflation.
With the right advice investing can keep you ahead of the cost of living over time, potentially increasing your wealth. Ultimately, saving money provides you with greater financial security, flexibility, and the ability to achieve your financial goals.
But what are the options when faced with continuing market volatility and uncertainty? One of the oldest rules of investing is ‘Don’t put all of your eggs in one basket’ – but how do you identify which eggs go into which baskets.
Many people don’t save due to lack of awareness, or due to low income as they need to prioritise necessities such as food, housing, and healthcare. Others are in debt for many reasons while others procrastinate, putting off saving for the future because it feels like a distant goal, and they prioritise immediate wants and needs over long-term savings.
But what about those who do want to save? An investment account can be a powerful tool for building wealth and achieving financial goals. However, it’s important to understand the risks involved and to carefully consider investment decisions before making any investments. Seek advice from a financial advisor or professional before opening an investment account.
A recent Bank of Ireland survey shows that people prioritise saving for holidays (49%), home renovations (27%) and buying a new car (22%) ahead of other pursuits. The survey showed that only 11% are saving with an eye on investing and, while 23% of respondents positively rated their know-how in the investments area, 49% rated their knowledge as poor.
To help, Bank of Ireland is running the ‘Invested Webinar Series,’ designed to help people learn more about investing. The reason for this is that from the survey they found people fear losing some or all of their money by investing. Others are afraid of having their money tied up for years or simply feel they don’t have enough money to invest.
Notably men claim to have more investment knowledge (33%) versus only 13% of women. 28% of men currently hold an investment account (just 10% of women), as the survey uncovered an overall lack of financial literacy in the investments space.
When looking for advice people will consult a family member (38%) or a friend (24%) regarding investments, rather than consult a professional financial adviser (22%), and 37% of those surveyed have never spoken to anyone at all about investing.
Commenting on the survey, Bernard Walsh at Bank of Ireland said: “I encourage those with money left over once daily expenses are factored in, and who already have a rainy-day fund in place, to consider investments. Investments are a smart way to achieve growth, and with patience and time can generate good returns.
“This is where good advice really plays its part in helping people make an informed choice, and why it is so important to talk with a qualified financial advisor.
“Investing is a long-term activity, but once people find the right balance between seeking the return they want and investing an amount they are comfortable with, the result can often be well worth it.”