Investing or saving — what's worth more today?

If you are not a fan of the straw man method, there are basically two options for you to use your free funds — save or invest. What specifically to imagine under this?

Save actually means deferring consumption. In short, a person who saves does not spend part of his income, but puts it aside for later use.

Invest means using your funds in order to achieve their future appreciation.

A significant phenomenon that comes into play when it comes to saving vs. investing is, of course, inflation. Most economists define this as an increase in the general price level of goods and services in an economy over a period of time.

So, at a time when inflation is at record highs, is it worth saving rather than investing?

Now let's look at both options in more detail and evaluate their advantages and disadvantages.

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Who saves is worth three -- or not?

The most important difference between saving and investing is in the degree of risk of lossthat is associated with these activities.

In savings, the risk of loss is normally low, and deposits with banking institutions are additionally insured.

The problem is that “normal circumstances” -- at least in terms of the rate of inflation -- are absolutely impossible to talk about at the moment.

And even when inflation is somehow tamed, the value of our money will continue to decrease.

Michal Stupavský, an investment strategist at Conseq Investment Management, stated in 2021 that “in a period of increased inflation, holding a larger amount of cash in a bank account is literally deadly”, as cash bears no interest.

Although interest on savings accounts has since risen from near zero to somewhere between 5-6%, they are far from covering inflation. In addition, interest is charged with a 15% withholding tax. Therefore, the recommendation continues to apply: Keep cash at the maximum level in the bank account Six Month Expenses of your household.

On average, how much do Czechs put aside and save from their income?

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What will inflation do to your savings?

Model example:

In a savings account with 5% at the interest rate you have 100 000 CZK.

Suppose inflation is 18%.

Behind 1 year will the purchasing power of your savings just 86 250 CZK.

Investing — higher risk, higher potential

Investing is no longer the prerogative of the moveable tie-dyers running around the stock exchange floors. High inflation, but also increasingly More affordable investment options This has caused the ranks of investors to expand steadily.

It is possible to invest in traditional instruments such as stocks, bonds and real estate, or in alternative instruments (gold, art objects, wines, noble spirits, cryptocurrencies or digital tokens).

Of course, every investment is associated with a certain amount risks. Therefore, if you decide to start investing, it is important to find out the necessary information and answer a few questions, such as:

What is my investment horizon? (In other words, how long can I lack the money invested?)

Do I have a deferred — e.g. savings account — sufficient provision for unexpected expenses?

What is my attitude to risk? Am I a bold, or more of a conservative investor?

If you answer these questions rationally and do not rush headlong at the first opportunity that comes your way, you do not have to worry about investing.‍

Invest and don't be robbed by inflation

The experts are clear - if we want to protect our savings, we need to give up the relative safety of bank accounts and take the investment risk. Dominik Stroukal, chief economist at payments institution Roger, argues that “savings is dead and will be for a long time to come” and that “we must go to risk or let savings be eaten up by inflation.”

Does this mean that every spare crown needs to be taken immediately and invested? The No. First of all, you need to keep a cool head and follow proven recommendations.

It is better if the deferred money generates additional money for you. Procrastination alone is not enough, because due to inflation, the saved finances lose value over time — you will always lose part of the saved money without exception.

Observe the rule of 50:30:20

Financial rule 50:30:20 says that cost of living They should account for a maximum of 50% of our total revenue. On entertainment, travel and more things that we enjoy, we should reserve 30%. And the remaining 20% is advisable to put aside, part of them invest and the part to save on savings account.

With apps, investing is easy and efficient

Novice investors may be deterred by the seeming complexity inherent in investing. Candlestick charts, macroeconomic analyses, currency exchange rate movements... uf.

Until recently, it was practically necessary for every investor to have an economic education or a capable financial or investment adviser. Today, however, it is possible to invest online, using investment applications that have greatly simplified the investment process.

Why are investment apps so popular?

• You can invest in seconds, in a few clicks.
• Biometric authentication guarantees security.
• Often, economic reports, analysis and other useful information are available directly in the application.

So investors don't have to deal with how to invest and instead focus on another question — what to invest in?

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Diversify, diversify, diversify

The well-known investor advice is: “Never put all your eggs in one basket. “ It can be easy to succumb to the lure of a new cryptocurrency token or “meme stock” that is riding the fashion wave and promises to appreciate in the order of hundreds of percent.

With similar investment opportunities, or rather speculation, there is usually a huge risk involved. Investing in risky assets may not be bad, but they should always make up only a small part of your portfolio. It should be based on a suitably assembled combination of assets such as stocks, bonds, commodities and real estate, possibly alternative investments.

A well-tuned investment portfolio is an ideal tool to evaluate your funds even in times of high inflation, secure yourself for the future and achieve financial independence.
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Invest in real estate even without millions in your pocket

Real estate is long (and rightfully) considered a safe investment because store the value of money for decades. In addition, their prices in recent years practically constantly growing and that growth often significantly outstrips inflation. Therefore, real estate investments should definitely form part of your portfolio.
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Just a few hundred crowns

But what if you can't or don't want to put a few million into buying an investment property? Then it is the ideal solution for you investment crowdfunding.

Investown offers a simple and clear investment tool with which you can invest in loans secured by real estate from 500 CZK. The annual yield is fixed and reaches up to 10% (That is, more than in savings accounts).

With Investown, you can easily enrich your portfolio with real estate investments — investments with minimal risk and a very interesting valuation. The decision is yours 🙂.