A New Year's resolution to save, or what one abandoned cup of coffee can do
Every year we make new promises to ourselves, and one of them is to start saving for next year. However, it is not always possible to keep these promises.
The founder of the Profitus investment platform, Viktorija Vanagė, shares tips on where to start and how to save more. She says that everything must start with the questions of why you want to save and what is the purpose of saving.
"The goals can be different: to buy your own home, to retire earlier, to save for studies, or maybe to create a source of passive income. The goal should be clearly defined and only then should one think about the means to achieve it," says V. Vanagė.
With a clear goal, you can go to the next step and take a closer look at your finances, understand where you spend money, how much, and for what purposes you allocate your funds. Because often the main reasons why it is not possible to deal with personal finances are hidden in small expenses that we do not emphasize.
"We can take a basic example - one cup of coffee on the way to work. Let's say coffee costs EUR 2.50, if you buy a cup of coffee every day when you go to work, then this amount reaches about EUR 55 in a month, and if you also like to eat a bun with your coffee, this amount will be even higher," assures V. Vanagė.
The expert says that after carefully calculating the expenses and deciding how much you will set aside each month, you need to choose a way to save. One of the ways of saving is investing, which helps not only not to spend the accumulated money, but also to achieve better results.
"Investing prevents money from depreciating and helps you reach your goal faster. Imagine that if you can set aside 100 EUR every month and invest it with 10% annual interest, after twenty years you will accumulate about 76 thousand. euros. Meanwhile, if you just save that money and keep it in the account, you will accumulate a total of 24 thousand in the same period. euros". - says the founder of the investment platform.
Don't be afraid of investing
The expert says that you should not be afraid of the word investment and think that it requires a lot of capital or a lot of knowledge, for me, investing has changed in the last decade.
"Investing in shares and funds are no longer the only investment methods. Now, every person can easily and in small amounts invest even in real estate through crowdfunding platforms and earn an average of 10% annual interest," says V. Vanagė.
She adds that there are various investment methods, so you need to choose the one that is most understandable to you and does not forget to consider the risks. Because risk is always related to return. The higher the earnings offered, the higher the risk can be expected.
"When investing in loans to people, you can expect 15% or 20% annual interest, but you don't get collateral or guarantees in this case. Meanwhile, when investing in real estate through crowdfunding platforms, the pledged real estate is always higher than the investment itself, but the interest, in this case, is also lower," says V. Vanagė.