Saving vs Growing Your Money. Which Do You Need?

Key Takeaways

1. Saving and growing your money is a balancing act. The balance is unique to each person.

2. While savings can provide a safety net, ensuring that you’ll have emergency funds available, investments offer the potential for more substantial long-term growth and wealth accumulation.

3. The Citi Interest Booster Account allows you to both save and grow your money to offset the effects of inflation. Enjoy an interest rate of up to 4.0%* p.a.

From a young age we are taught that we should always save our money, but as we get older and the quest for financial security increases, we start to consider whether it’s better to diligently save or actively grow your money. The pros and cons between these two strategies is a dilemma for anyone striving to achieve their financial goals. So, what is the best strategy for your financial future?

What Does It Mean to Save?

The concept of saving money is one of the fundamentals of many financial plans - in a simplistic form, it’s setting aside a portion of your income, stowing it in a savings account, and then watching it accumulate over time. While it’s an essential habit for financial stability, and can provide a certain amount of security, it’s also important to acknowledge that over time, inflation can also erode the value of stagnant money.

With inflation degrading the value of saved money, its growth is fairly limited, or in some cases, even diminishing. A dollar today won’t have the same purchasing power ten years down the line. While there’s a comfort of having savings and money readily on-hand, it is not an ideal long-term solution for growing your money.

Does Growing Your Money Solve the Issue?

On the other hand, there’s the concept of growing your money. This usually involves investing in stocks, bonds, real estate or other investment and insurance solutions out there. While it may sound daunting, with careful research and good guidance, the potential rewards of growing your money this way can be a powerful wealth accumulation strategy. Investments have the potential to outpace inflation and generate more returns, which allows you to build your wealth over time.

The Balancing Act of Saving and Growing

"The most successful financial plans often involve a mix of both saving and investing," Matt Read, Head of Retail Banking, Citibank Singapore adds. "Having an emergency fund backed by savings, together with strategic investment opportunities, can help you build wealth while safeguarding against unexpected financial challenges."

Handling your financial puzzle is finding the right balance between saving and growing your money. Both are important parts of a holistic financial plan - while savings can provide a safety net, ensuring that you’ll have emergency funds available, investments can offer the potential for more substantial long-term growth and wealth accumulation.

There’s another vital piece of the puzzle that you’ll also need to look at - insurance. Insurance is the bigger safety net against unexpected events that could potentially derail your financial stability. Whether it’s health insurance, life insurance, or property insurance, this offers protection that savings alone might not cover.

Other Key Elements

Whether it is saving or growing your money, there are some critical elements in wealth accumulation strategies that include compound interest - this means reinvesting earnings from investments to further increase your returns. This power of compounding interest unlocks exponential growth to help combat inflation.

When looking at savings, the savings account you pick will play a pivotal role. Some banks offer saving account bonuses, or higher interest rates, like the Citi Interest Booster Account, which offers a base interest rate of 1.5% per annum up to S$50,000 balance. Get up to 4.0% per annum when you spend, invest, insure and perform other banking activities with Citi. This can help to do more than just offset the effects of inflation. Compared to a current account, savings accounts offer higher interest rates, and some banks even roll out saving account promotions to entice new customers with higher introductory interest rates or other perks.

What is the Right Balance?

Financial experts suggest that you should earmark a portion of your income to be put into a savings account, and strategically put aside another portion for investment opportunities, and into insurance. This balance is unique to each person, depending on your financial goals, risk tolerance and time horizon. What’s also important is making sure that you keep yourself updated about financial plans and market trends, which you can easily do with the help of experts who are knowledgeable and can guide you over the years.

Finding this balance empowers everyone to accumulate wealth and secure their financial future. It’s not a one-size-fits-all solution but an ongoing journey that requires guidance, patience and continual learning.

The Best Way Forward

Ultimately, a dynamic approach which includes saving, growing and insurance is fundamental for achieving financial aspirations and stability. Keep in mind that the financial landscape is constantly evolving, so your strategies should too. Find out more about the Citi Interest Booster Account and earn up to 4.0% p.a.* interest on your savings.

*T&Cs apply. Insured up to S$75k by SDIC.

Disclaimers

*Terms and Conditions Apply. Singapore dollar deposits of non-bank depositors are insured by the Singapore Deposit Insurance Corporation, for up to S$75,000 in aggregate per depositor per Scheme member by law. Foreign currency deposits, dual currency investments, structured deposits and other investment products are not insured. For more information, please visit www.sdic.org.sg.

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