Pocket finances. Is your money safe?

When it comes to depositing your savings in a bank, it is of utmost importance that you ask yourself this question.Is your money safe here?As I have already told you in previous postst is crucial not to leave your piggy bank without generating interest. At least to cover inflation and prevent your money from losing value every day. But it should not be done in any way.

In this post, I inform you about the danger that exists when using one option or another. Never forget, information sets you free. Do not rely on what the media tell you or the rumors floating around out there. Decide for yourself. But for that, first, get well informed.

We are flooded with information and we do not know how to understand it. It is important for me to guide people's attention towards key questions.

Yuval Noah Harari

What options do you have?

I'll give you a brief summary, in case this is the first time you stumble upon the finance section of my blog. To fiercely defend your savings and make them continue to grow, you have several options:

1. Interest-bearing accountsThese are accounts from banking institutions that give you interest based on the average balance you have in them. In recent months, they have multiplied and there are many options.
2. Indexed funds. I have talked about them on several occasions. You actually buy shares of a set of companies from different sectors and countries. The set of companies depends on the fund. They are called indexed because they are programmed to mimic the profitability of a specific stock index. For example, the IBEX 35 index or the American S&P 500.
3. SIALP. According to its acronym, it is a long-term savings insurance. There are maximum annual contributions and after 5 years, it is exempt from taxation when you recover it.
4. Real estate investment. It would be the historical investment of buying houses to rent them out and thus pay off the mortgage and/or sell them later.

There are more options, but these are the ones I have researched the most. I have left links to previous posts about some of them in blue. Regarding real estate investment, I will talk more about it in future posts. Right now, if you are interested in starting to inform yourself, I recommend Carlos Galán's book Libertad Inmobiliaria . Very easy to read and educational.

What dangers lurk?

Each of them has different dangers. In some cases, more than dangers, they are disadvantages. In this post, I discuss the cons of the first two: interest-bearing accounts and indexed funds.

- Interest-bearing accounts have the limitation that there is a maximum balance. For example, in Trade Bank's account that I use, there is a maximum interest-bearing balance of €50,000. Not my case. But if you are lucky enough to have more savings, know that in this account it is advisable to only keep those €50,000. The good thing is that you can put the rest of your savings in other accounts to maximize the interest earned.

On the other hand, another possible danger is that your bank goes bankrupt. We solvethis with two preacautionsThe first is not to put our savings in any bank. Always make sure that the bank is solvent. We can find out by looking at the National Securities Market Commission (CNMV) or the European Central Bank (ECB). Both regularly publish lists of investment services that we should avoid for not having the necessary registrations and licenses. In addition, the ECB publishes solvency and default indices of major banks periodically. The second precaution is to limit the balance we have in a bank to 100.000€100.000€. That amount is guaranteed by the Deposit Guarantee Fund. In the European Union, it is standardized and all states guarantee €100,000 per account holder and entity.

- Indexed funds have the danger of losing value and therefore profitability. Since you are investing in companies, in the end it's like playing the stock market. The shares in your fund may not perform as well as expected. We mitigate this danger in several ways:

Making periodic contributionseliminates volatility from the equation. This is known as price variation of a stock. You may buy expensive one month but cheaper another month. This way we achieve an average and reduce the risk of buying at a bad time.

-Investing in different fundsfrom different sectors and regions helps spread risk.- Comfortably change countries/continents (switching from American S&P 500 to Japanese Nikkei 225), sectors (investing in emerging markets but also in technology sector), and even risks (there are so-called fixed income funds and variable income funds). Learn more here.

Keep learning. Always.

One idea I would love to convey today is to be constantly learning so you become less manipulable and more independent which I find absolutely necessary.

Change is always the final result of true learning..

Leo Buscaglia

You now have more information than before reading this post.- If you made it this far, thank you and congratulations.- Nowadays with short videos and immediacy being prevalent, there are few people who have patience to read an entire post.- Encouraging waiting, working on excess future thinking and delaying rewards are some virtues I want to work on this summer.- Are you joining me?

See you soon and happy reading!