6 best places to save your money
Is it five days after you have been paid but you do not to have money or cannot explain where your salary went to? Kenyan athletes like Delilah Asiago, Peter Kosgei, Anthony Kiprono and Mathew Kipkoech who won gold medals in 1990s and earned millions found themselves in a similar scenario. They can not tell where their money went. Saving your money is a step to planning a great future for yourself. Money is a medium of exchange. You need money to get the things you do not have or produce for yourself. You need money to buy food, shelter, clothes among other things that you may not have. You may also need money to start a business. To learn about business management you may take the course CERTIFICATE IN BUSINESS MANAGEMENT (CBM) – SCHOOL OF BUSINESS – FINSTOCK EVARSITY COLLEGE. Money is valuable but scarce. You must manage it well. For you to manage your money well you need to budget, save, invest and also pay all your debt.
You can also save your money and it ends up losing value than gaining value. This is caused by inflation. According to the oxford dictionary Inflation is a general rise in the prices of services and goods in a particular country resulting in a fall in the value of money. For example, if at the beginning of the year you had 100dollars and the inflation rate is at 7%, at the end of the year your money would have decreased in value of about 7 dollars. It is important for you to save money because you are able to build generational wealth, have a way out of uncertainties in future and enjoy quality of life.
Here are 6 best places you can save your money.
1.Homebanks
A home bank is a container where you deposit money into. The advantages of a home bank are that; there is proximity to put the money in the container and You are also able to deposit as little as you want. The disadvantages of a home bank are that; it does not have security; the money does not increase in value meaning if you have saved 100dollars you will only withdraw 100dollars and you can withdraw the money at any time.
2.Savings Account
Most banks offer a fixed savings account where you deposit money for a certain period of time without withdrawing it. The interest rate differs between banks. Some banks may give an interest of 4% per annum. Meaning if you have saved 100 dollars the amount of money that would be added into your account would be 4dollars. To learn more about savings accounts in banks and their interest rates you may register for the course CERTIFICATE IN BANKING & FINANCE (CBF) – SCHOOL OF BUSINESS – FINSTOCK EVARSITY COLLEGE .The advantages of a savings account are that the money is secure and the value of the money is increasing but due to inflation it may decrease. The disadvantages of savings account are; there is no gain of money due to inflation and there is risk if the bank closes down.
- Money Market funds
A money market fund is a unit fund offered by insurance companies and asset management companies . Some money market funds in Kenya accept money deposits of as little as 1dollar. Some companies may offer between 8-10% interest, compounded. For example, if you have 100dollars at the end of the year 8 dollars would be added to your account. The advantages of a money market fund are; Your money is secure; The value of the money increases and there is less risk. The disadvantage of money market fund is that the insurance company may go under. To learn more about insurance you may register for the course CERTIFICATE IN INSURANCE, MODULE 1 (CII1) – CII – FINSTOCK EVARSITY COLLEGE.
4.Bills and Bonds
Bills and bonds are government aided investments. You give the government money and depending on the type of investment, they would give it back with 10-15% interest rate. If you deposit 100dollars you will be given 10 dollars at the end of the year. Different countries have different rules and regulations for the bills and bonds but for Kenya you have to deposit a minimum of 500dollars to invest in a bill and 10000dollars for a bond. The interest is paid biannually and is given back in lump sum after the period of the bill or bond which may be 3years or even 10years. The advantage of these is that all the initial money invested will be returned after the stated period. The disadvantage is that you have to wait for a certain period so that you withdraw the amount invested.
5.Stocks
Every company registered in the national security exchange of a country is allowed to sell a part of the company. You may buy a certain amount of stocks depending on the rules and regulations of the country. There are daily trades who earn money by buying and selling on a daily basis and holders who are given dividends at the end of the year. The advantage is that you may earn a lot of money because there are high returns because it is high risk but the disadvantage is that you are likely to lose money because it is a highly risk area to put money in. You can learn about risk management in the course CERTIFICATE IN RISK MANAGEMENT (CIRM) – SCHOOL OF DEVELOPMENT STUDIES – FINSTOCK EVARSITY COLLEGE.
You may learn more about stocks from the course BASICS IN STOCK MARKET INVESTMENT (SMI) – BUSINESS AND STRATEGIC MANAGEMENT – FINSTOCK EVARSITY COLLEGE. As you decide to invest in stocks, take note that there are fraudulent people who may lie to you that they can invest for you in the stock market. The companies and organizations allowed to enable transactions for the stock market are registered in the NSE portal. You can learn more about fraud in the course CERTIFIED FRAUD EXAMINER (CFE) – ACFE – FINSTOCK EVARSITY COLLEGE
6.Saccos
This are saving cooperatives where you deposit money and they invest on your behalf in different areas. At the end of the year they may give you dividends depending on how the investments performed. The advantages are you earn money on a yearly basis and can borrow money if you want to invest. The disadvantage is that you can not withdraw your money at any given time.
As you choose where to save your money take into consideration the rate of inflation in your country. Also take into consideration the goal for your saving because you may save money in a 12 year bond yet you need that money to pay your fees in a year. As you save your money you will need to know how to handle debt and taxes. You can learn more about debt in the course BASICS IN DEBT MANAGEMENT (FRDM) – FREE COURSES – FINSTOCK EVARSITY COLLEGE and taxes in the course BASICS IN TAX ACCOUNTING (FRTA) – FREE COURSES – FINSTOCK EVARSITY COLLEGE . You will also need to protect your savings through insurance. You can learn more about insurance in the course CERTIFICATE IN INSURANCE, MODULE 1 (CII1) – CII – FINSTOCK EVARSITY COLLEGE.
