What to Do With Savings?

You probably already knew that a savings account will yield almost nothing in 2020. Add to that an average inflation of approximately 2% per year, and your savings will be worthless and less. Do you have more than $30,846 in savings? Then you also have to pay tax. Fortunately, there are many alternatives to a savings account. These alternatives to a savings account can help you overcome your question of what to do with savings.

Investing in stocks

The classic alternative to saving is investing. When it comes to investing, people are often reluctant. Logical because there are simply risks associated with investing. The rule is often, the higher the return, the higher the risk. Everyone knows the stories of people who have lost (a lot of) money investing. Still, much of the fear of investing comes from ignorance. By investing for the (very) long term, the risk of loss becomes increasingly smaller. If you also know what you should and should not do, the chance of loss will be even smaller. Investing naturally is never without risk, and past performance is no guarantee for the future. However, it is a very accessible way to build capital for the long term. Investing is possible for everyone regardless of your income. You can already have your money invested, from $50 per month. You can of course also choose to get started yourself. There are various online brokers where you can open an online account for free. Whatever you choose, investing is never without risk.

Pay off a mortgage

Additional mortgage repayments have been made more and more in recent years. This has to do with interest rates, among other things. It is therefore a great alternative for people who do not need the money in the future. Early repayment of your mortgage has a few very nice advantages, such as:

  • You will have less residual debt in the event of a sale.
  • You no longer have to pay tax on your savings that you have used to repay.
  • You become financially independent more easily
  • You do not run any risk as with investing, for example.

Of course, there are also disadvantages to the extra repayment of your mortgage such as:

  • Not every type of mortgage is suitable for this.
  • It yields less return than investing.
  • You can no longer access the money you used to make extra repayments.
  • Possible penalty interest if you repay too much.

With most mortgages, you can annually repay 10-15% of the total amount without penalty. Are you enthusiastic about the idea of ​​paying off your mortgage faster? If you now know what to do with your savings, it is wise to find out everything carefully before you switch to making extra repayments on your mortgage. When in doubt, always contact your financial / mortgage adviser.


If you don’t know what you can do with your savings, crowdfunding might be something for you. It is of course also a very good idea, and at the same time, you can also help entrepreneurs. It is a win-win situation for both you and the entrepreneur. You can choose in which projects you invest your money. There are even projects for developing countries. This way you can make a return on your savings, and help people who have a harder time than us. Surely that’s a great way to invest your money. Of course, there are also risks associated with crowdfunding, so find out carefully before you start.

Savings deposit

A savings deposit can give you a much higher return than your savings account. Of course, you should be able to spare your money for a while. The term of a savings deposit varies from 3 months to 10 years. The interest and term are fixed in advance, so you know exactly what you will receive.

If the account falls under the deposit guarantee scheme, you are protected up to $100,000 in the event of bankruptcy. Find this out well in advance! Although it is an attractive way to save, it also has some drawbacks. The return is a lot lower than with investing, for example. For example, in most cases, the customer cannot access the savings during the term or there are costs involved if you want to. If interest rates rise, you will not benefit from this either.

Real estate

Investing in real estate is more versatile than you might think. The classic way is an investment property, of course, you must have the capital for this. Fortunately, you can finance part of the costs for an investment property with a bank. These make buying an investment property accessible to less wealthy people. However, you must have sufficient knowledge to make a return on your investments. You are also responsible for maintenance and any repairs.

You can choose to invest your money through a real estate fund. By investing in these funds, you do not need to have the knowledge yourself. The real estate funds often invest their money in different sectors and countries. Think of offices, shops, industry, hotels, logistics, and healthcare. There are wonderful funds with a proven track record, but investing in real estate is of course not without risk.

Invest in yourself

Investing in yourself is one of the best investments you can make. This can yield more returns than any other investment! And it doesn’t even have to cost a lot of money. An investment in yourself could be a book, for example. And there are books that can change your life. An investment in yourself is for the long term, as you will benefit from it for the rest of your life.

You can also invest in a healthier body by exercising or eating healthier. You will also benefit from this for the rest of your life. You will not regret an investment in yourself.

Emergency fund

You do not invest in an emergency fund for the return. The money stays nice in your savings account for emergencies. In fact, everyone should have a personal emergency fund. You will undoubtedly have experienced financial setbacks, and how nice it would be if you could just use your emergency fund. An emergency fund is therefore good for your night’s rest!

Most financial experts recommend an “emergency fund” of 3 to 6 times your monthly expenses. That is a considerable amount. If you spend an average of $3000 per month, you will already arrive at an amount of 9 to 18 thousand euros. But, with a well-stocked emergency fund, you can easily handle most financial setbacks! Don’t forget to top it up after using your emergency fund.

Whatever you do with your savings, make sure you always know the risks of your investments. In most cases, money, the higher the return the more risk. If in doubt, contact a financial advisor.

Felix Tammi

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