As a general rule, savings rates have tumbled over the course of the last few years. Interestingly, this trend has not impacted on the traditional savings account, which is usually made available alongside current account options. While this type of regular savings account offered an average return of 1.64% back in December, it has risen slightly to 1.72% at the beginning of 2016. While this is still below the rate of 1.72% available 12 months ago, it at least shows that some savings accounts are heading in the right direction.
How to develop the ideal saving strategy in three simple steps
This is just one element of saving money, however, and if you are to successfully make the most of your earnings you must create a viable, simple and manageable strategy. Here are three steps towards achieving this goal:
1. Choose a viable savings Vehicle
To begin with, you will need a viable savings vehicle to deposit and grow your wealth. We have already touched on how regular savings accounts offer optimised returns in the current climate, but it is still important to compare the market before making an informed decision. This will offer you access to an account with the highest possible rate of interest, while also enabling you to operate within the limits and thresholds that are relevant to you.
2. Consider Investment Options
There is an old adage which suggests that you must 'speculate to accumulate, but this works better if you are dealing with a large fund to begin with. So once you have used a regular savings account to gradually build your wealth in a risk-free environment, you can begin to diversify and seek out more substantial returns. There are a wide range of investment options available, from low-risk vehicles like secure bonds and dividend investments to more profitable entities such as forex trading. They key is to scale your efforts and look to diversify across a broad range of options, creating a portfolio that reflects your level of knowledge, experience and appetite for risk.
3. Create passive income streams where possible
Over time, this strategy should begin to deliver returns while helping you to build and manage your wealth. The final step is to consider automating your earnings through the development of passive income streams, which instantly increases the amount that you commit to your savings in the first instance. While you can seek out extra work or look to sell your skills as a freelancer, this may compromise your work-life balance over time. Whether you look to invest in real estate or generate an annual return from a blue-chip stock investment, passive income offers you the best possible chance to grow your savings quickly and in a risk-averse scenario.