Hello everyone, I am a wealth star, today I will share with you how money should be saved and where to save in the current era of falling interest rates.
First, bank interest rates are falling
Over the past three decades, you've gradually adapted to falling interest rates, from 10% to 1.65% now. In the future, it is possible to face an era of zero or even negative interest rates. Do you have what it takes to adapt to this change?
Banks used to be where you save, but now they are where you save, and in the future there may be custodial fees, which is the advent of the era of negative interest rates.
An insurance company is a special institution that can really help you save. Unlike banks, they offer insurance products that can add value to your assets and provide them with a hedging effect.
Second, there may be five major risks in bank deposits
1. In the past, it was almost impossible to imagine that China's banks would go bankrupt. But now, the threat of bank bankruptcy is real. This means that if the bank goes bankrupt, depositors' deposits will be compensated by deposit insurance institutions. However, the maximum amount of compensation may only be $500,000, and the amount exceeding this amount will not be fully compensated.
2. Banks do not have long-term savings products, and the maximum term is only five years. This is because banks need to bear interest rate risk. In other words, if interest rates fall in the future, banks will also not be able to reduce interest payments, which will result in losses or lower profits for banks. And if interest rates rise, people may think that saving is not cost-effective and withdraw their deposits, putting banks at risk of a run. Therefore, this way of saving is unstable. Many people know that two consecutive five-year savings do not equate to one ten-year savings.
3. Bank savings allow individuals to take risks and rely on personal savings to cope with future risks. While savings come at no extra cost and even interest income, this approach can lead to inadequate protection. When unexpected events occur, you will not be able to cope if the deposit is insufficient.
4. The convenience of bank savings makes many people unable to save enough funds and fall into the dilemma of advanced consumption. When they really need funds, they find that they don't have enough cash available in their accounts.
5. Banks usually use simple interest calculation, and there is no compound interest effect. The funds deposited in banks cannot maintain and increase in value, but can only gradually depreciate with inflation. Although our country's goal is to keep inflation below 3 per cent, it is often not fully achieved. Your money faces this threat every year, and your hard-earned wealth is quietly lost.
Third, the five benefits of depositing funds into insurance companies
1. Savings can only earn interest income, and risks cannot be estimated. In contrast, insurance companies can assess the risk and provide you with appropriate safeguards. For example, in the event of a sudden health problem, insurance can provide huge benefits to prevent you from running out of savings due to unexpected circumstances.
2. You can deposit funds in insurance companies for a long time to achieve long-term savings goals, such as accumulating health security funds and pension funds. Depending on your wishes, you can choose to store it for 20, 30 years or even longer.
3. The savings income of insurance companies is exempt from taxation. The state encourages individuals to do this type of financial planning, so your savings gains are not affected by taxes. If you can't keep your finger on the pulse of the country's economy and choose the wrong direction of investment, you may be in a passive position.
4. Insurance companies implement a compulsory savings system to ensure that you will have sufficient medical security and pension funds in the future, and will not exhaust these funds due to excessive consumption. In the event of a real emergency, you can also apply for a policy loan to meet your funding needs.
5. Saving in an insurance company can not only enjoy interest income and high protection, but also receive dividends. Dividends are calculated according to compound interest, enjoy the distribution of profits of insurance companies, help resist the impact of inflation, and truly realize the preservation and appreciation of funds.
Fourth, the benefits of long-term savings
In this era of falling interest rates, choosing the right way to save is crucial. Although traditional bank deposits are convenient, they face problems such as bankruptcy risk, interest rate risk, insufficient protection, advanced consumption and capital depreciation.
In contrast, insurance company savings are able to solve these problems and bring more benefits. By depositing funds with an insurance company, you not only enjoy interest income, but also comprehensive risk protection. Insurance companies can provide huge claims for emergencies to ensure your financial security.
In addition, you can choose a long-term savings plan to prepare for the Health Security Fund and Retirement Fund to achieve longer-term financial goals and make your money more valuable. In this era of better savings, let's embrace new ways to save and embark on a smarter financial journey.
In the current environment of falling interest rates, choosing the right way to save is critical to our finances. Despite the convenience offered by traditional bank deposits, there are a number of problems, such as bankruptcy risk, interest rate risk, insufficient protection, advanced consumption and capital depreciation.
In contrast, choosing to deposit money into an insurance company's savings method can solve these problems and bring more benefits. By depositing funds into an insurance company, we can not only enjoy interest income, but also comprehensive risk protection. Insurance companies are able to provide huge claims in case of emergencies to ensure our financial security.
In addition to this, we can also choose long-term savings plans to prepare for the Health Security Fund and Retirement Fund, achieve longer-term financial goals, and make our money more valuable. In this era where saving money is more valuable, we should embrace new ways to save and embark on a smarter financial journey.
Long-term savings plans can help us plan for future health protection and retirement. By saving a portion of your money regularly, we can build a stable fund for future medical expenses and health coverage. In this way, when we face sudden illness or increased medical costs, we can get support from this fund and reduce the burden.
Long-term savings plans can also be used to prepare for retirement. By saving a portion of our money on a regular basis, we can financially support our life in retirement. The establishment of a retirement fund ensures that we have enough funds to cover our daily expenses and maintain our quality of life after retirement.
Another benefit of choosing a long-term savings plan is that our money can become more valuable. In this era of better savings, traditional ways of saving often fail to keep up with inflation. Long-term savings plans, on the other hand, often offer higher interest rates and returns, allowing our money to grow better.
All in all, choosing a long-term savings plan is a smart choice to prepare us for health security and retirement, while making our money more valuable. Let's embrace new ways to save and embark on a smarter financial journey.
Regarding the knowledge related to investment and financial management, you can continue to follow my headline number [Fortune Zhixing] (the same name on the whole network), or you can communicate with me privately.
Fortune Smart Star, focusing on finance, investment and insurance knowledge sharing, professionally provides the latest and most practical information and advice. Let's explore the wisdom of wealth growth together!