Saving is no longer fun. Such a shame, but it still doesn’t deliver much. Yes, a little peace of mind. But the costs are high these days. Time to change our savings habits.
Just because the fun is gone, doesn’t mean we’ve stopped doing it. The Dutch are still European Savings Champion. During the first corona year, we all hoarded 52 billion euros. A record amount! We cannot do otherwise. Saving has been instilled in us from an early age. Me too.
Around the age of 8 I was allowed to open a savings account at the former Postbank. I really wanted that, because then I got that great Pennie money box as a gift. Generations know what I’m talking about.
The Pennie piggy bank was a technical tour de force in the late 1980s. You put your guilder coins in it and they were automatically sorted for you into transparent tubes containing dimes, quarters, stuivers, guilders and Rijksdalers – from smallest to largest.
When your piggy bank was full, you deposited your pre-sorted guilders into your Pennie account, where they returned at 6% at the time. Saving was fun back then. As a child I liked to make calculations and calculated that with my saving rate at the time I would be a millionaire around the age of 40. Come on, guilder millionaire, but still, I had a plan.
I’m 40 now. That plan didn’t work out for several reasons; the falling savings rate is one of them. Recently I took action. I made a new savings plan. That’s what it looks like.
I asked myself the question: what do I want with my money? This resulted in different answers. Things that happen at roughly 3 different times in the future. Every moment requires a different way of saving or investing:
Near future
This is money I will need for years to come. For a car, renovation or, as a freelancer, to absorb entrepreneurial risk. This money is in an old-fashioned savings account with 0.01% interest. It consists of about 6x my monthly expenses, no more.
Medium distant future
That’s in 10 to 20 years. The children are growing up and I want to be able to support them. Maybe I’ll work less.
When that jar is full, I deposit a monthly amount into an investment account, where you can invest in indexes. I do not invest in individual companies, but in the market as a whole. Over a period of 15 years, the risk of loss is low. But not nil.
Far future
That’s over 25 years from now. My pension. I will use my annual space for the distant future. That is the maximum amount that I can put aside for tax-friendly purposes for after my retirement. For example on an annuity account.
Such a savings plan will look slightly different for everyone. But the constant is that you look at different horizons. Each term has a different risk profile. Long-term investing is an excellent alternative. But it always starts with the question: what do you want with your money?
Journalist Vincent Kouters makes saving and investing simple. Do you also have a question for Vincent? Mail to [email protected]