Will you save USD 2,000 every month and want to get the most out of it? We have prepared a theoretical list of options for valuing money.
Putting aside two thousand crowns a month provides plenty of opportunities to value money. By simply multiplying it, you get $ 240,000 in ten years, and USD 720,000 in three decades.
Suppose you want to start postponing those two thousand crowns to future pension insurance. If your current monthly salary is roughly the average wage and you are under 40, you have a high chance of securing your old age very well. If you are older, do not despair. You too have a chance to save some money for retirement. With a higher average wage, it is advisable to postpone a higher amount, as well as in a situation where you are older, but with a lower income.
According to the security of the investment and the degree of appreciation, we have created two model portfolios that correspond to a conservative and dynamic investor. In both cases, we anticipate that the investor will have at least 25 years to retire and will delay two thousand USD throughout this period, including a regular increase in inflation. In this paper, we focused on a theoretical interpretation of the conservative appreciation of your funds. We assume that the insurance in the form of life or accident insurance has been resolved and now you want to save and invest. Therefore, the question of where to best invest is directly raised. We will therefore try to answer briefly.
If you are too worried about your money and are bothered by fluctuations in the value of investments, a conservative portfolio is suitable for you. This is designed so that most of the money goes to deposit products such as building savings and supplementary pension insurance. To a lesser extent, we work with open-end mutual funds within the conservative portfolio.
We divide two thousand for the first time…
In order to get the most out of your money within a conservative approach, it will be appropriate to divide it as follows. Evaluate half of the amount, ie one thousand crowns, through building savings. In this way, you will receive a ten percent state support, which will amount to USD 1,200 per year with a deposit of USD 12,000. Put 300 USD in the supplementary pension insurance. The remaining 700 USD is suitable for investing in open-end mutual funds. The advantage of this solution is that you have over half of the monthly deposit stored in products to which the state contributes.
Doubt is a bit with supplementary pension insurance, because the effective time for the highest possible appreciation is about the first five or six years, then the profitability decreases. On the other hand, you can defer supplementary pension insurance for, for example, fifteen years and instead increase the value of money through building savings, which provides yields of around five percent per year with a mandatory six-year commitment period.
Compared to supplementary pension insurance, building savings has the advantage that you can enter into a new contract every six years and obtain a stable five percent return in the long run. On the other hand, the yield on supplementary pension insurance will decline in the long run.
There is nothing wrong with investing in mutual funds over the 25-year investment horizon. It is easy to invest in equity funds or in mixed or fund funds for the first 20 years. For the remaining five years, they will sell out unit certificates and direct the money to a term deposit.
… And for the second time: Combination of building savings + mutual fund
The second way to distribute two thousand crowns relatively conservatively is to save USD 1,667 per month in building savings and the rest in a mutual fund. Some mutual funds allow long-term investors the opportunity to invest as little as three hundred crowns. This setting is slightly better than when co-participating in supplementary pension insurance. The advantage lies in those 25 years when money in funds can be valued.
To get the highest possible return, you will receive a maximum state support of two thousand USD per year from building savings (ten percent of the deposit of 20 thousand dollars per year). The constant annual yield will then be around five percent. One of the positives is that money on deposits with building societies is legally insured.
Investment waves and binding times
Every six years after the end of the binding period, money can be withdrawn from the building savings and deposited either on a term deposit or gradually invested in mutual funds. When choosing the second option, it is good to invest money, for example, three to five thousand a month. You can repeat these investment waves linked to the “construction” binding period twice during those 25 years. If you are a bolder conservative investor, even three times. In the third fund cycle, it is appropriate to invest money, for example, in bond funds, in short, those that are designed for a shorter investment horizon and achieve lower volatility. All redeemed by an average lower yield.