Savings SHOCK!Oct 23, 2014 Blog Personal Finance
So, have you always done what your mother told you to do? Repeat after me: save, save, save. That probably rings a bell doesn’t it? While mom is usually right about most things there a few things we could probably teach her. Saving might just be one of those things.
The mantra we were taught over and over again is to save. When we are growing up, getting jobs and settling down, everyone tells us to save – even that R2 the Tooth-fairy left you! Save for the future, save for the proverbial rainy day, save for retirement and then save some more. But after that, no one really tells us what we should do next.
Now, no one is saying saving is wrong – what we’re saying that it is not always right. Confused? Let me explain. Planning and preparing for retirement, having emergency funds for any unexpected events and saving in general is a very useful thing. But after saving the money, we need to make it work for us.
There is no point in just saving up and keeping the money in the bank. The interest rates provided by banks are so low they barely even cover the bank fees. Your hard saved capital is simply stagnating – for you. The bank, on the other hand, ends using your capital to leverage loans against other people, earning themselves a tidy profit for doing very little at all. Some banks offer special savings accounts but even the interest rates offered by them can’t compete with the growing inflation per year.
So essentially keeping your money in a savings account means watching it decrease in value, and not the other way around.
So, still going to leave that money sitting there gathering minus interest? I didn’t think so. Well, luckily for us all, there are several alternatives to pure saving – we could buy a thousand lottery tickets, become an online forex trader or, if we’re smart about it, get involved with peer-to-peer lending.
Peer-to-peer lending is a way of lending your money through social networks or investing it in projects that you believe in. RainFin, a South Africa lending club platform, offers you the chance to lend money to others while getting a good rate of return on your investment. You can help crowdfund projects that you are interested in, kickstart someone’s dreams or help someone consolidate their debt and take control of their finances. The interest rates offered are generally greater than the conventional investments, essentially helping both the borrower and the lender make money.
So next time you think about saving, also think about how you can grow your money and make it work for you. Peer-to-peer lending is simply one of the easiest, simplest and most interesting ways to help you money reach its full potential – all the while helping someone else reach theirs.