Whether you’re planning for retirement or looking to build an emergency fund, saving cash is the key to unlock financial stability. But you don’t need to lose out on earning high interest with significant cash deposits. In fact, you can use your cash to build wealth.
This guide covers the benefits of saving money to safeguard your wealth for the long-term. We’ll explore why saving cash is so appealing, while expanding on ways in which savers can increase the value of their deposits with a few smart adjustments to their finances.
How can saving money build wealth?
On the surface, it may appear that saving money is in direct conflict with building wealth. After all, cash deposits are one of the lowest risk assets you can own, kept on hand in case of emergencies.
However, saving money can offer advantages beyond its typical status as a financial buffer, provided savers seek out . For savers looking to build long-term wealth, high yield accounts can strategically build your wealth and protect the value of your deposits against inflation.
Here are just some of the financial goals you can achieve by saving cash in high-yield savings accounts:
- Legacy planning: Higher levels of interest on your deposits can build up a substantial financial reserve, which you can pass on to future generations or gift as philanthropic investments.
- Sustained value: Economic uncertainty is a constant, which can reduce the value of your savings. Competitive interest rates ensure your cash retains as much of its value as possible.
- Peace of mind: You can spread your savings across multiple banks and accounts, . Your funds are also more accessible in a savings account than other investments, giving you peace of mind that you still have a financial safety net to fall back on.
Below, we’ll share some of the key benefits of saving money to preserve and grow your wealth for years to come.
Top 5 benefits of saving money at high interest
1. Secures your financial independence
Economic headwinds such as recession or inflation will reduce the value of your finances over time. If you’re not careful, you could end up with severely reduced spending power, especially as you approach retirement.
High interest can counter this effect, earning you a over time.
2. Helps you achieve life goals
Your savings can help you pursue any personal aspirations you may have, such as funding a child’s education, purchasing properties or making impactful philanthropic contributions.
Consistent saving ensures you have the funds available when you need them, without imposing painful financial constraints on day-to-day spending.
3. Offers flexibility for investing
Depending on the type of account you choose, saving cash can also provide you with greater financial flexibility so that you can take advantage of favourable market conditions when they arise.
This means you can strengthen your finances when others can’t. For example, you might consider buying stocks and shares in a downturn to benefit from the bounce in valuation when they recover their value. Although such an activity is risky, if you have substantial savings, you can decide whether the future return is worth the potential loss.
4. Protects you against unexpected expenses
Medical emergencies, legal issues or urgent home repairs pose significant financial challenges and usually happen when you least expect.
Emergency funds put a buffer in place should the unexpected occur, rather than panic-selling your investments to cover costs. High interest savings accounts ensure that the amount you set aside has a better chance of keeping up with rising prices.
5. Supports your retirement goals
A stress-free retirement depends on securing your finances. Pensions are typically placed in low-risk investments, so that your money is safe when you retire. However, nothing is guaranteed, and you may find you need a bit of extra cash to enjoy your retirement to the full.
By managing your savings in high interest savings accounts and planning ahead, you can set up a financial cushion that means you can enjoy your golden years to the fullest.
Our pension calculator is a valuable tool that can help you plan your retirement savings.
You’ll gain an accurate projection of your retirement funds, so you can estimate how much you’ll have to work with and what you need to save now to make the most of your future.
It’s never too late to start saving at high interest
Wherever you are on your financial journey, maximising the value of your savings is always worthwhile.
Discovering the best accounts is the first step to strengthening your finances for years to come.
Open cash deposit accounts to build wealth with Flagstone
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Gain access to accounts with 60+ banks and let your savings grow.