Everyone with spare money faces the same choice. Do you keep it safe in a savings account, or do you invest? We’ll list the pros and cons and help you determine what suits you best.
Everyone with spare money faces the same choice. Do you keep it safe in a savings account, or do you invest? We’ll list the pros and cons and help you determine what suits you best.
Goed om te weten: beleggen brengt risico’s met zich mee. Je kunt een deel van je inleg verliezen. Resultaten die in het verleden werden behaald, bieden geen garantie dat die in de toekomst ook behaald kunnen worden. De informatie in onze blogs is algemeen en geen persoonlijk beleggingsadvies.
Saving is the most well-known and trusted way to set money aside. Saving is easy, safe, and flexible.
With saving, you run almost no risk. Your money in a savings account is protected up to €100,000 per bank. This means: if a bank goes bankrupt, you’ll always get that amount back from the central bank. Do you have more than €100,000? Then you can distribute it across multiple banks. This way, you can’t really lose your savings.
You can withdraw your savings immediately. This comes in handy if you face an unexpected expense, or if you’re saving for a big purchase that’s coming up.
However, this comfort and safety come with a few drawbacks. The interest rate on savings is quite low, especially in recent years. As a result, your wealth hardly grows.
And even if your wealth grows slowly, you also need to consider inflation. Inflation means that prices rise and that you can buy less than before with the same amount. If the interest on your savings account is also lower than inflation, your account balance may increase, but you end up with less purchasing power.
You can invest in various financial instruments such as stocks or bonds, or in investment funds. The goal is to achieve a return that’s better than the savings interest rate.
The advantages of investing mirror the disadvantages of saving. If you look at the past forty years, investing yields much more than saving. And the return was also higher than inflation.
This higher return makes an enormous difference compared to saving in the long term. This is explained by the effect of compound interest: you earn returns on what you earned last year. This way, the difference with saving keeps growing as time progresses.
Just as the advantages of investing mirror the disadvantages of saving, the same applies to the disadvantages of investing. Investing carries risks: the value of your investments can both rise and fall. So you need to be prepared that you might lose part of your investment.
To weather these market dips well, a long investment horizon is important – at least five years, but preferably longer. If you know this in advance and can set aside your money for at least that period, you’re better prepared. This way, you can stick to your plan and calmly ride out the peaks and valleys.
Beleggen brengt risico’s met zich mee, je kunt (een deel van) je inleg verliezen. Als je spaart, loop je dat risico niet.
For most people, it’s not about choosing between saving or investing, but about the order: first saving, then investing.
Saving is the foundation for financial security. This allows you to cover unexpected costs, pay for large purchases, or for example, make a down payment on a house.
If you still have money left over that you can spare for a longer period – at least five years, but preferably longer – then you can start investing. Keep in mind that the value of investments can decrease. But those who have consistently invested for the long term over the past decades rarely look back on it with regret.
Goed om te weten: beleggen brengt risico’s met zich mee. Je kunt een deel van je inleg verliezen. Resultaten die in het verleden werden behaald, bieden geen garantie dat die in de toekomst ook behaald kunnen worden. De informatie in onze blogs is algemeen en geen persoonlijk beleggingsadvies.