UOB One Savings Account Raises Interest Rates to 7.8% - Should You Save Or Invest?

Enya Rodrigues

12 December 2022·

Earlier this week, UOB announced that they are raising the interest rate of their One Savings Account to up to 7.8% p.a interest. UOB is not alone in doing so. Across the board, we see banks in Singapore fighting to remain competitive by offering increasingly attractive interest rates to encourage people to deposit their money with them.

During the COVID-19 pandemic, many countries were cutting their federal interest rates in an effort to increase lending and spending in order to stimulate the economy. This led to record low levels of interest rates on savings accounts. Many individuals opted to expose themselves to some level of risk and invest their savings rather than leave them idle in low-interest savings accounts.

However, with the current upsized interest rates on savings accounts, is it still worthwhile to invest your money into various investment vehicles, such as fixed deposits, treasury bills or even ETFs, or are you better off saving your money in a high-interest savings account?

If You Have A Small Amount Of Savings

One major caveat to the current high-interest rate promotions banks are running on their savings accounts is that you need a large amount of money in your savings account to be able to reap the full advertised interest rate.

For example, with the UOB One savings account, you are only able to enjoy the full 7.8% interest on your savings if you have an account monthly average balance of over S$75,000.

If you have less than S$30,000 in your savings account, you will only enjoy an interest rate of 3.85% p.a. This is almost half of the advertised high-interest rate of 7.8% p.a.

This is in contrast to the six-month tenor for Singapore Treasury Bills, released on 8 December 2022, which has an interest rate of 4.30%. The minimum bid amount for a Treasury Bill is S$1,000. Hence, with a smaller amount of money, you can get a higher rate of return if you invest rather than place your money in a high-interest savings account.

Furthermore, if you do not have a large amount of capital right now but are able to budget a small amount of your monthly income towards investing, taking a dollar-cost averaging approach might also be more lucrative for you in the long run.

The S&P 500, an index that tracks the 500 largest companies in the United States, has averaged an annual rate of return of 11.88% from 1957 to 2021. Choosing to dollar-cost average into an ETF every month might be a better allocation of your money. Granted, this incurs more risk than a savings account as you are exposing yourself to market volatility. However, the risk-to-reward ratio might be easier to stomach when working with a smaller budget.

If You Have A Large Amount Of Savings

Conversely, if you have a large amount of capital, choosing to deposit it into a high-interest savings account like UOB One might be a good option. With Singapore’s inflation rate in 2022 sitting at around 6%, an interest rate of 7.8% is not only matching but slightly beating inflation.

There are currently very low hurdles to achieve the 7.8% p.a. interest rate on deposit accounts with more than S$75,000. All that is required is for you to credit your monthly salary of at least S$1,600 into your UOB One account and spend at least S$500 on any UOB credit or debit card. For the average working adult, it should not be too difficult to meet this requirement.

Savings accounts are seen as an extremely low-risk asset. The Singapore Deposit Insurance Corporation (SDIC) insures all member banks and financial companies for up to S$75,000. This means that in the very unlikely event that a bank goes bankrupt, all of your deposits, up to S$75,000, will be guaranteed and returned to you. Hence, there is very little risk of you losing your initial capital, unlike when you are invested in the stock market.

Furthermore, a savings account provides the most liquidity. There is no lock-up period like with a fixed deposit or Singapore treasury bill. Savings accounts are also not subject to market fluctuations the way ETFs are. If you need to dip into this pot of savings for emergencies or investing opportunities along the way, you can do so without facing any penalties or losses.

This prevents one from jumping into an investment that they do not have a full understanding of just because they do not want to let their idle cash get eroded by inflation. With a high-interest savings account, you are able to buy yourself time to wait on the sidelines for the perfect investment opportunity to arise.

Conclusion

Whether you choose to take advantage of the high-interest savings accounts now or to continue investing depends on both your personal financial situation and risk appetite.

While choosing to invest may not be as lucrative a decision if you have a smaller amount of savings, the peace of mind you get from knowing that your money is currently accruing interest in a rather risk-free vehicle could be good enough, even if you do not enjoy the full 7.8% p.a. interest rate.

For more information on different options available to you on the market right now, check out our round-up of the best savings accounts out there.

Reference:

https://sg.finance.yahoo.com/news/uob-one-savings-account-raises-022013039.html

Read Also: Best Savings Accounts in Singapore 2022

https://www.valuechampion.sg/bank-accounts/best-savings-accounts-singapore

Saved $1 million and living my dream retirement

Roy Nash long dreamed of retiring at the age of 55.

A self-taught investor, he diligently stashed all the savings he could in stocks and mutual funds. So by 2009, when he did turn 55, he says he had more than $800,000 saved -- enough to step away from his nearly three decade long career at a natural gas distributor in St. Louis.  

Now Nash is 61 and his smart investment choices have helped him grow his retirement savings to more than $1 million.

This sizable nest egg allows him to live the lifestyle he wants. He takes four trips a year to places like Chile and Jamaica and, during the rest of the time, he's volunteering around town, driving the elderly to doctor's appointments or helping poor families file their income taxes.  Now Nash is 61 and his smart investment choices have helped him grow his retirement savings to more than $1 million.

How did he do it?

Nash said he learned about the importance of saving from his mother, who raised him in Marianna, Ark.

"My mom told me when I was real small I should learn how to save some money, because my father was a spendthrift," said Nash. "I took it to heart and went beyond saving. I became an investor."

At the age of 22, he moved to St. Louis and eventually went to work as a controller for the largest natural gas distributor there.

During his free time, he taught himself to invest by reading Money and SmartMoney magazines. That's how he learned to love dividend stocks, high-yield, closed-end funds and mutual funds. He also invests in open-end funds and index funds.

Every year, he socked away between 10% and 15% of his income into his 401(k) plan. Additionally, he also saved another $300 a month in investing accounts with Fidelity.

"I wouldn't consider my savings a sacrifice. I had a good paying job and a budget," Nash said. "I disciplined myself."

And he was mindful about looking after his money and reinvesting gains back into funds and stocks.

"I always reinvested my capital gains," Nash said.

In the beginning, he worked with a brokerage to invest his money. But now he manages his own portfolio.

Nash said he's in an informal retirement club, mostly other retired friends from the office, who he loves teasing about their money managers.

Roy Nash on vacation with his family

"They're paying these guys 1.2% to 2% in fees!" Nash said.

Nash said he collects a healthy sum each year in dividend payouts from his investments in high-yield closed-end mutual funds and preferred stocks.

But still he keeps things simple, living on around $50,000 a year.

Too young for Medicare, Nash gets health insurance through Obamacare, "which has been fantastic," he said.

His retirement income is also enough to satisfy his lust for travel. He takes several trips each year. Often it's just visiting family and friends in Arkansas. But this year, he went to Mardi Gras in New Orleans. He's going to Jamaica in the spring and Santiago, Chile later in the year.

Most days, Nash fills his time by offering his services to the community. During the tax season, he helps the poor prepare their tax forms. And he volunteers for the county, driving housebound elderly residents on much-needed medical errands to doctor's appointments and the pharmacy.

He also plays golf and likes to go fishing, hunting and boating. And he works out at least five days a week, either on a treadmill or a bicycle for between 20 and 30 minutes a day.

"The most important thing I do, is live an active lifestyle," Nash said. "That keeps my doctor bills down."

He has two kids and six grandchildren, ages 3 to 15. Lately, he's become his family's go-to, back-up childcare for sick grandkids.

"If the kids are sick, I go and pick them up, so it doesn't disrupt their parents' work," he said.

And he takes pride in telling his story throughout the community, to help young people learn the importance of saving regularly and early.

"If your income is equal to your expenses, you're not going to save anything," Nash said. "I think anyone making $40,000 a year should be able to save money in St. Louis." 

http://money.cnn.com/2015/03/09/retirement/dream-retirement-million-dollar-saving/index.html?iid=SF_PF_River

Amongst the millions of questions regarding financial matters, the most popular one is undoubtedly “How do I save my money?”. Here are 3 common ways that could help you save a sizable amount for when it’s time to retire.

1) Contribute to EPF, do NOT withdraw

For Malaysians, EPF is undoubtedly the easiest way to save your money. Your personal contribution of 11% aside, your employer’s mandatory contribution of 13% (for employees earning less than RM5,000 monthly salaries) makes it a total of 24% of your monthly wages saved under your name each and every month.

To top it off, EPF’s average return of 5% per year is significantly higher than any fixed deposit interests in the market right now.

Tips: Firstly, get employed at a company that contributes to EPF. Try to keep your money in your EPF account for as long as possible because there simply aren’t any other bank deposits with higher interest rates in the market. If you can help it, DO NOT use any of your EPF sub accounts to pay for your home or buy a computer, so you can take full advantage of EPF’s high interest rate to maximize your returns.

2) Put your money aside the good old fashion way

Saving your money requires determination and discipline. If you aren’t already doing so, try putting aside a small percentage of your salary every month-end and save it in a separate bank account, preferably one without any easy withdrawal facilities (eg. ATM).

When you have a moderate amount, transfer the money to a high-interest fixed deposit account so it can generate greater interests whilst stopping you from accessing the funds every time you feel like getting a new handphone or a new pair of shoes.

To find the best fixed deposits in the market right now, check out our fixed deposit comparison table.

Tips: Like many other things in life, saving is an endeavour that many find hard to adopt especially in the beginning. To ease yourself into your money-saving journey, you may wish to start off with a moderate amount (say 5-10% of your wages) so that it does not affect your cash flow to the extend of making you give up altogether. Over time, you can try to increase the amount as the act of saving becomes a habit. Also, when it comes to saving, it helps to start as young as possible so you can reap the benefits of compound interest over the long run.

3) Use your money to invest in something

If you have moderate tolerance to risk, are not close to retirement age and have a sizable amount in your savings or fixed deposit account, you’ll probably want to consider using some of the monies you have for investment purposes.

Be it in shares, gold or real estate; investment is a great way to save even MORE money because the potential returns are usually much greater than, say, putting your money into a bank. The downside, however, is that investment involves RISKS – the risk of non-performance from your investments, or in certain cases, the risk of total evaporation of value for your investments caused by adverse market conditions.

Tips: Not all categories of investments are born equal, so you are advised to do your homework well before you engage with any kind of investment. For example: properties are considered medium-risk investments; they generally enjoy consistent growth but they also have low liquidity (i.e. not easily turned to cash). Shares, on the other hand, are considered high-risk investments; they are prone to fluctuations in value caused by volatile market, which basically means you could potentially GAIN a lot or LOSE a lot. Whichever form of investment you choose, it is best to make a genuine effort to learn about it before you commit.

Love this article? You might also wish to read about the importance of diversification in investment.

How To Save Money: 3 Common Methods

By Ching . 3 April 2013 . Money Management

Taking small steps out of cash

Generating the returns required for a longer retirement needn't mean a wholesale change of strategy, says Alex Hoctor-Duncan.

05 Jul 2013

There are three reasons why investors stay in cash: 
1.  they like the income, 
2.  they like the idea of their money being protected and 
3.  they worry about volatility. 
Investors also like the capital preservation that cash offers.

But there is inherent risk. Returns are low, so investors run the risk of seeing their purchasing power ravaged by inflation over the long term.

I sense that people are starting to recognise the limitations of cash. They feel they should look to make their money work harder, particularly as they are likely to be living longer.

However, what they want to achieve with their savings – a secure retirement with a good income – and what they are doing to achieve it, are not properly aligned. Simply saving in cash is not necessarily going to generate the returns required for a longer retirement.

This needn’t mean a wholesale change of strategy; it could be more about taking small steps out of cash, about consulting an IFA and revisiting their financial goals. It could mean looking again at how and where they invest – in the UK or internationally – and working with the adviser to set new objectives and plot the path towards those goals.

Related Articles

• Identify investment goals 
  05 Jul 2013
• Where best to put my money? 
  05 Jul 2013
• Financing the future: live long and prosper 
  05 Jul 2013

If taking small steps is the path an investor chooses, the smart option is not to take all the money out of traditional cash or bond investments. Taking a portion of that money and looking for investments which provide an element of more flexible income could be one step that less risk-averse investors could take towards achieving their goals.

The earlier they take action the better, but it is never too late. However, wait 10 years and contribution levels might need to be double what they would have been.

Moving out of cash and safe haven investments in search of higher returns will involve accepting a greater risk of capital loss. You may get back less than you originally invested. Past performance is not necessarily a guide to future performance.

http://www.telegraph.co.uk/sponsored/finance/blackrock/10121192/blackrock-investment-strategy.html

Financing the future: live long and prosper. Plan for an extended future.

With the economic crisis leaving interest rates sitting below the level of inflation, independent financial advisers can help us change the way we look at savings.

For decades in the run-up to the financial crisis, most people took a safety-first approach to saving and investing for the long term.

And for good reason. Putting their savings into a deposit account or long-term savings bond offered the safest of traditional safe havens – they could relax, confident that their money would be secure and would grow.

But piling up cash in these once-safe havens is no longer the one-way bet that it used to be. The places we have long thought of as havens are rather less safe today than they used to be, for two main reasons.

The first is that as the financial world has shifted, so have the risks that we face. In the past, you could put your money on deposit at a bank or building society, or use it to buy super-safe government bonds, and be confident of earning a rate of interest that would allow your capital to grow faster than prices were rising. That enabled you to preserve the purchasing power of your money over the years while keeping it safe.

It might not grow as fast as it would if you had chosen other, riskier sorts of investment – but at least inflation wouldn’t erode the value of your nest egg.

Related Articles

• Small steps out of cash 
  05 Jul 2013
• Identify investment goals 
  05 Jul 2013
• Where best to put my money? 
  05 Jul 2013

But you can no longer rely on that old certainty. Savings rates on virtually all deposit accounts and yields on government bonds are stuck well below the rate of inflation, which changes the picture enormously. Prices are now rising faster than your savings can grow, which means that year by year your money can buy less – and therefore one of the main attractions of these traditional safe-haven investments has vanished.

The second big issue is that, for most of us, the long term is getting a lot longer than was the case for previous generations, with life expectancy rising rapidly. According to the Office for National Statistics, in 1981 a man of 65 could expect to live another 13.1 years. By 2009, this life expectancy had risen to 18 years. For women, the equivalent figures were 17 years in 1981 and 20.6 years by 2009.

The conclusion is obvious: longer life is nothing if not a blessing, but the money we salt away is going to have to work harder and support us through old age.

In a world where savings earn less than the rate of inflation and will have stretch further, sitting on cash looks a less viable option. By the same token, buying government bonds, even though they are backed by the Treasury’s promise to repay your capital in full, looks increasingly risky given that the yields they offer are also well below inflation.

For people who know they need to plan for an extended future – and one in which the easy answers do not work as well – this is a challenging time.

So over the coming weeks, the Telegraph will offer ways to reconsider long-term financial plans, bearing in mind the risks that inflation and miserly interest rates now pose to savings.

Many will want to take financial advice to help decide how to approach these issues, but will also want to feel confident that they know enough to have a proper conversation with their adviser.

This series will equip them to ask the right questions – what investments should they be considering to balance their need for growth with their appetite for risk? What are the merits of passive investing versus active management of their money? Should they be looking to international markets to help improve their returns? Where do they invest for the additional income they need?

For most people who are trying to build a fund for the long term but at the same time do not want to take on excessive risks, the answer to these problems is going to involve some combination of working longer, saving more and investing their money in different ways.

Inevitably, that means we are all going to have to accept rather more risk when investing for the long term. Therefore, a key element of the series will be to help people to dig deeper when they talk to their adviser and make sure that they understand the kinds of risk that go with the various investment options that are open to them.

The financial crisis and its after-effects have changed the rules of investing for many years to come. The old ways of doing things no longer represent a risk-free option – we need to take a different approach.

http://www.telegraph.co.uk/sponsored/finance/blackrock/10121155/future-finance-investments.html

David Bach on how to get rich

Financial writer and best selling author David Bach advises how to get rich in his book, "The Automatic Millionaire."


Important point:  @ 19 min, 20 min.

Investment Basics: How To Start Investing With Little Or No Cash

Average Savings for EPF Members by Age, 2011

Average Savings for EPF Members by Age, 2011

Click here:

http://mystockfolio.blogspot.com/2012/10/average-savings-for-epf-members-by-age.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MyMalaysiaStockfolio+%28My+Stockfolio%29

Do You Invest Like a Grasshopper or an Ant?

When it comes to retirement planning, are you Aesop’s grasshopper or ant?

Like the ant in the fable, should you hoard and invest as much money as you can now, depriving yourself of little luxuries and gambling that you’ll live to a grand old age? Or should you have a bit of fun, like the grasshopper, spend that cash and then end up in your 90s living on Ramen noodles?

Jim Miller’s article posted earlier on this blog— “How Much Should You Save?” — underlines the challenge everyone working without the backup of a pension faces.

A recent Bloomberg.com article (see article posted below) suggests that more of us may be grasshoppers, but caving into immediate gratification may give our finances as much as a six-figure hit. The article notes that a “unique challenge for retirement planning is that the end goal is so far away that it’s hard to see how actions we take or don’t take today will have a huge impact on our older selves.”

Bloomberg further references a contract created by the Allianz Global Investors Center for Behavioral Finance. The contract, written to help financial advisers hold their clients to the investing course, includes this passage: “Should the portfolio value decline by 25 percent, we commit to avoid the urge to panic and sell the portfolio. Similarly, should the portfolio value increase by 25 percent, we commit to avoid the urge to chase the hottest investments.”

If you really want a look at how your savings will pile up if invested in a retirement plan, it’s worthwhile to play around with the 401(k) savings calculator at Bankrate.com. Then tinker with the retirement income calculator at the same website — a fascinating, but also scary, numbers game that may have you joining the ant farm.

http://blog.betterinvesting.org/?p=2836&utm_source=MailingList&utm_medium=email&utm_campaign=BI+Weekly_10-15-12

Retrain Your Brain for Financial Success
By Carla Fried - Oct 9, 2012

Dismal market returns haven’t exactly created a tailwind for 401(k) and IRA portfolios over the last decade or so, but an equally pernicious -- and more entrenched -- problem is that our brains are messing with our retirement plans.

“We are wired for financial defeat,” says Rapid City, South Dakota, certified financial planner Rick Kahler. “Whatever has the most emotional juice right now is what gets our attention. Invest $5,000 in your IRA for a retirement that is 10, 20, 30 years away? Or spend the $5,000 for a vacation to the Bahamas?” All too often, the Bahamas wins out.

William Meyer, founder of Social Security Solutions, notes that our thirst for immediate gratification can easily take a six-figure toll. More than two-thirds of folks opt to claim a lower Social Security benefit starting as early as age 62. For a married couple, than can mean leaving as much as $100,000 on the table. “If you wait to claim until age 70, you’re locking in a benefit that is 76 percent larger," says Meyer.

More productive planning

Forever tweaking your asset allocation probably won’t get you near the retirement payoff that tweaking your brain will achieve. Consider these strategies for engaging your brain in more productive retirement planning:

Get Thee to a Calculator, Pronto: OK, you know you probably should be saving more for retirement. And when life keeps intervening -- that Bahamas vacation you and yours really really need, or the realization that the kid’s orthodontia isn’t covered by insurance -- you tell yourself that next year, you’ll ramp up your savings rate. You’ve got plenty of time, right?

What you may not realize is how expensive that time is. Research conducted by Craig McKenzie, a psychology professor at the University of California, San Diego, shows that we have a tendency to “massively underestimate the cost of waiting to save. It’s difficult to appreciate the difference between giving yourself 20 years to save and 40 years.”

For example, a 30-year-old who is saving $10,000 a year and earning an annualized 6 percent will have $1.2 million at age 65. Care to guess what someone starting at 45 will have? About $390,000. The younger saver invests $150,000 more than the 45-year-old does, and in return has an ending balance that's $800,000 larger. Even if you’re already past your 20s and 30s, you might find it eye-opening to see how extending your investment timeline by delaying retirement on the back end of the calculation can help matters. Your company retirement plan probably has an online calculator you can play with; or try this one.

Make it Personal: How you frame retirement savings decisions can help boost your ability to delay gratification. When individuals were asked if they'd prefer to have $3,400 in one month or $3,800 in two months, 57 percent chose the latter. When the same scenario was framed in terms of one’s personal age -- “when you are 2 months older” -- 83 percent chose to wait for the bigger payoff.

How does that translate to better retirement planning? Yale School of Management marketing professor Shane Frederick, one of the study’s authors, says a 50-year-old who frames a savings goal as “when I am 65” will likely be more patient to focus on that delayed gratification, than someone who frames it as a more generic “in 15 years.”

Time Travel: Another unique challenge for retirement planning is that the end goal is so far away that it’s hard to see how actions we take or don’t take today will have a huge impact on our older selves. When researchers showed individuals doctored photos of their future selves, the human guinea pigs said they would save more than twice as much for retirement, compared to a control group that wasn’t given a glimpse of their older self.

Work is afoot to bring this visual exercise to a 401(k) plan near you. In the meantime, Hal Hershfield, who led the research, says he wouldn’t recommending using apps that age your face. “They're just not accurate enough, and I think seeing a strange-looking version of your future self may actually have the perverse effect of causing you to identify less.”

Hershfield, an assistant professor of marketing at New York University’s Stern School of Business, says new research that has yet to be published shows that simply writing a letter to your future self can help you become more invested in the welfare of that older person. “In a way, this task is a very low-tech version of the age-progression [photo morphing] techniques: Both have the same goal of creating a more vivid image of the future self.” Hershfield says hanging out with older folks -- parents, grandparents, volunteering with an organization for the elderly -- can also have a beneficial impact on your resolve to save more today.

Channel Ulysses. Most of us suffer from a bad case of recency bias, the tendency to extrapolate that whatever is happening today will keep happening. That’s why it’s so hard to buy low and sell high. If your recent experience is a falling market and bad returns, it’s not exactly easy to belly up to the bar and buy stocks, or simply stay committed to what you already own.

A Ulysses Contract -- a one-page statement that lays out your long-term strategy and the fact that you’re committed to staying the course -- can be a line of defense against over-reacting to current events. Like the Greek warrior, you are pre-planning for how you will circumvent alluring emotional sirens that can thwart your retirement plan.

For example, a sample Ulysses contract -- created by the Allianz Global Investors Center for Behavioral Finance for financial advisers to use with clients -- includes this passage: “Should the portfolio value decline by 25 percent, we commit to avoid the urge to panic and sell the portfolio. Similarly, should the portfolio value increase by 25 percent, we commit to avoid the urge to chase the hottest investments.”

Another useful step is to include a clause in your contract saying that before you ever deviate from your plan, you will write down your rationale. As Nobel Laureate Daniel Kahnemann explained in his book, "Thinking, Fast and Slow," you don’t want to cede all power to the quick-twitch intuitive part of your brain. Slowing down and simply writing down why you want to change course triggers more deliberate rational thinking. That’s the key to getting ahead and staying ahead.

(Carla Fried is a freelance writer based in California.)

http://www.bloomberg.com/news/2012-10-05/retirement-planning-2-0-retrain-your-brain-for-financial-success.html

Is Your Financial Situation Sustainable And Renewable?

Two words that have attracted a lot of attention are "sustainable" and "renewable." These words are generally used in an environmental sense when discussing energy and natural resources, but they should also be applied to your personal financial situation. Using sustainable and renewable sources of energy, for example, can create a secure supply of energy upon which people can rely. Similarly, ensuring that your lifestyle, savings rate and income can be sustained and/or renewed will help you achieve long-term financial security.

Your Lifestyle

Let's start by examining the spending portion of your financial equation. Do you know how much money you spend each month? If you don't, there's no time like the present to take inventory.

Even if you don't know how much you spend, you should certainly know how much you earn. Starting there, do you know what you would do if your next paycheck did not arrive? How long could you continue to support your current lifestyle? Even if you can't bring yourself to create a budget, at the very least you need to stash away some cash in case you find yourself unemployed.

Your Savings Rate

Now let's look at the savings portion of your financial equation. How much do you save each month? Include all sources, from money set aside in your checking or savings account to your 401(k) plan or other employer-sponsored plan. Don't overlook the cash you stash in the cookie jar.

Now figure out how difficult it would be to save that same amount if you were unemployed or were forced to accept a lower-paying job than the one you have today. When you are saving for long-term goals, such as retirement or the cost of a child's education, the amount you end up with is significantly impacted by the amount you put away early on because of the effects of compound interest. Any interruption of the steady stream of savings could significantly reduce the likelihood of achieving your goal.
When you put your savings plan under the microscope, be sure to view it in the context of your income. Are there places where you could cut your spending if times get tough? Is there a way to cut other expenses before you reduce the amount allocated to savings?

Your Income

Now, let's examine your primary income source. If you are counting on a paycheck from your job to finance your expenses, you should put some thought into where your job ranks in terms of sustainability. Are your skills likely to be in demand five years from now? 10? 15? Is your present employer stable? If not, are your skills easily transferable to another employer? Could you earn an equal or greater paycheck if you changed jobs?

If not, are you taking action? Remember, today is the best time to start preparing for tomorrow.

Hope for the Best, Plan for the Worst

Although the future is unknown, taking inventory of your life will certainly let you know where you stand today and take the stress off your tomorrow. If your current level of income would not be easy to replace, spend some time contemplating the merits of living with less.
Simplifying your lifestyle without reducing your income is a great way to free up some cash to build up your emergency fund or give your investment plan a major boost. With a little forethought, you can be prepared for any eventuality. 


The Bottom Line

Of course, if your cash inflows are steady, your savings plan is on track and your source of income is secure, there's nothing wrong with living the good life. Just do so responsibly. Don't buy more than you can afford, keep your debt-to-income ratio low and have a backup plan in the event that life rains on your parade.

Read more: http://www.investopedia.com/articles/pf/08/personal-finance-sustainable-renewable.asp#ixzz28Je6NVlP

Spending money is simple - anyone can do it. Making money is not.

Living below your means

Frugality is a natural aspect of Buffett's character.  As his wealth increased, he indulged in minor extravagances.  He bought an executive jet he named The Indefensible.  

But wealth didn't change his natural frugality.  It is easy to see how the consequence of living below your means is important when you're starting out.  It's the only way you can accumulate capital to invest.  What's less obvious is how this mental habit remains crucial to your investment success even after your net worth has soared into the billions.  

Very simply, without this attitude to money you won't keep what you have earned.  Spending money is simple - anyone can do it.  Making money is not.  That;s why living below your means is the attitude that underlies the foundation of the Master Investor's success:  Preservation of Capital.

Spend Less Than You Earn

Spend Less Than You Earn And Invest The Difference.


Now, too many people these days always complain about not having enough money for saving and investment... you know, your neighbour, your work colleagues, family members, and so on.  But funnily enough, somehow these people always have the means to buy that new car, travel on that exotic holiday and 
purchase that latest computer gadget.

But spending  your cash on such short-term luxuries isn’t going to help you create life-changing wealth from the stock market. Indeed, if you’re really serious about becoming a stock-market millionaire, then you have to make a serious commitment to your spending. In particular, you’ll need:



• to calculate what you can realistically afford to invest each month, allowing for unexpected bills and emergencies;
• to be willing to trim your current expenditure, remembering that every penny saved is a penny earned — and that such savings can also be invested over time and can count towards your million; 
• to be disciplined enough to fund your investment contributions by automatic direct debit, so you’re not tempted to blow your surplus cash, and; 
• to commit to those regular payments over a long-term timeframe — so there’s no cutting corners and/or giving up when the markets undergo a bad patch.


If you can adopt this necessary spending mindset, then you really could be on your way to building a sizeable share portfolio.




Ten Steps To Making A Million In The Market

Warren Buffett: "I have been a Compulsive Saver all my life."

Investment Basics: How To Start Investing With Little Or No Cash

The Basics of Personal Finance Investing: Stocks, Bonds, and Short-term investments.

Overall, investing is a great way to build wealth or a 'nest egg' for your retirement. If you invest regular amounts of money on a consistent basis over a long period of time, you are more likely to be successful in reaching your financial goals. By knowing just a few investing basics, you can get started with a variety of income options.

Three Types Of Investments

There are three basic types of investments you can choose from. There are stocks, bonds, and short-term investments.

Stocks

Stocks can also be referred to as equity investments. These are investments in individual companies that are publicly held. Stocks allow you to hold a small ownership in these companies. When invested in long-term, stocks have a high potential for growth. Stocks are not without risk, however. If the price of the stock drops, so do the investor's earnings. If a company goes out of business, the owners of the stock can lose their entire investment. It is wise to invest in the stock of companies that have been around for a very long time and that have a track record of rising stock prices.

Bonds

Buying a bond is basically lending money to the company you are purchasing it from. An example of this is buying a bond from the U.S. Treasury. After purchase a bond, you would be paid back after you cash it in. Buying bonds has the potential to increase your wealth with a lower risk than purchasing stocks, as well as the benefit of having a bit of protection from economic inflation.

Short-Term Investments

Short term investments can include money market investments, certificates of deposit (CD's), and others. After a short period of time, you can earn interest on these investments. You can usually begin receiving interest in as little as one year or less. These short-term investments are much less risky than stocks and bonds, but there is lower potential for growth. This means you can not expect as large of a return on a short-term investment as you could from stocks or bonds.

Article Source: http://EzineArticles.com/1408204

The Basics of Personal Finance Investing
By Richard MacGrueber

Income-seekers beat frozen bank rates

By Ian Cowie Your Money 


Last updated: February 7th, 2012

Base rates are still frozen - despite rapid inflation

Nearly three years after base rates were frozen at a historic low of 0.5pc,despite inflation running about 10 times that level, savers and investors are waking up to this slow-motion bank robbery – and pouring money into share and bond-based funds to preserve its real value or purchasing power.

Equity income and corporate bond funds dominated the best-selling individual savings accounts (Isas) last month, according to Skandia Investments; one of the biggest Isa platform providers. Nor is Skandia talking its own book. Rival managers M&G and Invesco Perpetual took seven of the top 10 slots.

With the best easy access deposit accounts paying 2.5pc before tax, what’s not to like about shares yielding 3.3pc net of basic rate tax – to take the FTSE 100 index of Britain’s biggest blue chips as a benchmark – or corporate bonds yielding even more?

It ain’t rocket science. Other sources, including Capita – Britain’s biggest share registrars – have been reporting rising investment by individuals for months now. Shares not only offer a higher initial yield to income-seekers but also the prospect of capital gains in future, if the current recovery in stock markets continues.

True, there is no guarantee that you will get your money back from investments in shares or corporate bonds; the latter being IOUs issued by big companies. In both cases, stock market setbacks may mean you get back less than you invest. But unit and investment trusts provide a convenient and effective way to diminish the risk inherent in stock market investment by diversification.

While the Government adheres to its unspoken policy of running negative real interest rates to inflate away its debts, the only certainty bank and building society deposits offer to long term savers is the certainty of becoming poorer slowly. Yorkshire Building Society reckonsthe average savings account lost nearly £2,500 of its real value over the last decade.

Perhaps the big surprise is that it took so long for people to wake up to what is going on. Most bank and building society deposits’ apparent security is a sham over anything other than the short-term while they fail to match the rate at which inflation is eroding what these savings can buy.

http://blogs.telegraph.co.uk/finance/ianmcowie/100014666/income-seekers-beat-frozen-bank-rates/

Chinese save four times as much as Britons

The average household in China has four times more savings than the average household in the UK, new research shows.

Currently, Britons save around 7 per cent of their disposable income. This compares with 47 per cent in China Photo: ALAMY

By James Hall, Consumer Affairs Editor

7:00AM GMT 03 Feb 2012

According to Lloyds TSB, the typical British household has £5,000 in savings and investments. This compares to over £19,000 in China.

German households, meanwhile, have average savings of almost £9,000.

The bank said that the “remarkable” findings reflect the fact that there is no “social safety net” in China, such as state pensions and benefits, meaning that families must provide for themselves financially.

Lloyds TSB also said that the so-called savings ratio in the UK – that is a person’s savings as a proportion of their disposable income – has been falling over the last decade.

Currently, Britons save around 7 per cent of their disposable income. This compares with 47 per cent in China.

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Greg Coughlan, head of savings at Lloyds TSB, said: “Despite significantly higher income levels, today’s British and German households are both being roundly beaten in the savings stakes by urban Chinese households.”

Dr Karl Gerth, author of As China Goes, So Goes the World: How Chinese Consumers are Transforming Everything and a lecturer in modern Chinese history at Merton College, Oxford, said that Chinese people save out of necessity because they have to pay for healthcare, education, housing and their retirement.

“It has nothing to do with ancient Confucian wisdom and all to do with contemporary realities,” said Dr Gerth.

He said that savings levels among young Chinese people are far lower than among their parents’ generation.

“In China, young people are learning to spend,” he said.

Lloyds TSB’s findings were based on over 3,000 interviews with adults in the UK, China and German.

http://www.telegraph.co.uk/finance/personalfinance/savings/9057328/Chinese-save-four-times-as-much-as-Britons.html