Saving has no point without yield!
Dump that savings account
Ok, this title is maybe a little over the top, but I am trying to make a statement here. As an insurance broker, and portfolio manager for customers, I have seen hundreds maybe thousands of people with hundreds of thousands of dollars in savings accounts that have a yield of just over 0 % per year. Some of them I have been able to convince that that is not the way to make money with their money. But most of them are just not convinceble. They are getting poorer by the minute, and just don't realise it, or don't have the financial education to know any better.
So, to most of them I say, "Dump that savings account", to wake them up. They act very surprised when I say that to them, but in fact the only that needs to be on a savings account is just enough to survive 6 to 12 months without wage. More is really not necessary in my opinion. All the rest of the cash should be going into assets that have yield. And that can be anything. From real estate, over stocks, bonds, to crypto. But without yield, saving really makes very little sense. Especially in the debt based system we are in, where inflation will always be part of the puzzle. Some years higher than others.
Search a puzzle that fits you
So, in what assets should you invest? That is very personal. And is something that isn't figured out in a few minutes. First of all, people should set their expectations of "yield". For instance, if someone expects 10 % yield per year. They will have to go and search for a mix of assets which together have yielded 10 % over the last 10 to 20 years. If you can find that mix, you will most likely be very close to that in the next decade too. Of course this has to fit into the risk tolerance of the person too. If they can't stand dropdowns of 25 % per year, the yield expectation needs to be lowered, and another mix has to be made.
For most of my clients I make a mix of ETFs, and other funds, that have real estate, bonds, dividend stocks, and growth stocks. The mix is for everyone different. But in the end it always fits the client.
I also tell them to stop watching their funds daily. This has no purpose at all. The horizon is always at least 5 years, otherwise investing has no point.
I hope I have inspired some people with this, and they will make this assessment for theirselves too.
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