Due to the lockdown restrictions imposed over the last year or so, households have been able to save more than ever. Without being able to spend money on socialising, entertainment, commuting, or holidays, the average household has increased their monthly savings to £276 – but is saving a risky strategy?
This does not constitute advice and advice should be sought in all instances before acting on it.
Both men and women have prioritised saving during the pandemic, but is simply saving the right way to grow your wealth?
With interest rates at rock bottom, while great for the housing market, it’s not great for growing your wealth if you are only relying on a savings account. Low interest rates are good for the housing market. And because rates are lower than inflation at the moment, you’re at risk of your money actually losing value in the future.
According to Wesleyan, before the pandemic, the public wasn’t prioritising savings, but now a third (33%) of women and a quarter (24%) of men are putting saving first, with over half (55%) of respondents reporting that cash savings accounts will be their primary method.
The 35-44 age group have reportedly saved the most over the last year, with an average of £296.83 a month. But the 18-24 age group have increased their savings the most — with an average extra £57.88 a month.
Diversify!
The best way to build your wealth, however, is through a diversified investment portfolio. Unfortunately, only 14% of people are investing in stocks and shares, an investment avenue that has the real possibility of increasing your wealth and beating inflation.
The pandemic has caused many people to change the way they think and operate, but it’s important to think about your long-term strategy and not just short-term solutions. Having multiple ways of saving and investing your money prevents potential risk associated with tunnel-vision and only employing one avenue of wealth building.
More and more people are getting interested in investing – almost a third of the 18-24 age group and a fifth of the 25-34 age group say the pandemic has sparked an interest.
Let’s reduce the risk in your savings strategy
It might seem like saving is the safe option, but there’s more risk associated with it than you might think. If you’re ready to make your finances a priority, schedule a meeting with us to start building your own financial plan today.
Can we help you with your savings strategy?
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Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.