This is a very related question, which I am always asked. I have money to invest, where can I invest my savings? Before thinking about investing, it is important to understand if what we call available funds is really free, that is, in the medium term, we will not need it. Therefore, it is important to ensure that we already have an emergency fund, that is, there are 3 to 6 months of resources available for unforeseen expenses, eventual loss of jobs or other special circumstances. The resources obtained from the emergency fund must be used quickly and placed in low-risk products, such as fixed deposits.
Once we have all the emergency funds, we can consider where to invest the remaining available funds. The ideal approach is to invest in a product that we feel comfortable with and that doesn't take too long. My investment philosophy is the same: invest in something that gives you peace of mind and almost no debt. The objective of the investment is to generate passive income that allows us to simplify life and bear part of the expenses, that is, to improve the quality of life and freedom of choice. Therefore, they should not generate additional stress and do not require much monitoring time. As the name suggests, personal finance is just personal finance, so the choice varies from person to person. For example, I feel comfortable investing in real estate, but some people may not sleep at night because they know they have the money to invest in real estate.
(image taken from the internet)
Below is a summary of the main destinations you can invest in:
1- Index Fund
Index funds represent a passive investment strategy, that is, the fund manager only needs to buy a group of shares belonging to a given index without making a decision to buy or sell. Therefore, the maintenance fees of these funds are very low and the rate of return is very similar to other investment funds. Due to the high risk and the need for time, I suggest not investing in a single stock or fund actively managed, unless the analysis of the company and the fund is in your personal interest. The best opportunity is to invest through DeGiro or other brokers
If you only have € 20,000, you have to decide whether you want to apply for a loan to fully invest in real estate or if you want to save more time to buy a property without having to resort to bank loans. Check out this article.
3- Term Deposit
Although, as we are currently experiencing, the low interest rate environment is not ideal for depositing our funds in fixed deposits, remember that this is an almost risk-free investment. Check the website to find interesting prices. For example, it can be used as a useful tool for temporary storage of funds, while saving money to achieve certain goals, such as buying a home or traveling without paying or creating your own projects.
4- Accessible / Treasury bonds
These are loans that it grants to the Portuguese country, so they are low risk products. Although I have never invested in these products due to the low profit margins they provide, they can be an interesting hypothesis. All relevant information is on the IGCP website.
5 - P2P PLATFORMS
The point-to-point platform allows you to invest directly in companies and even in individuals. Yes, there are risks involved, depending on the platform you invest in, the risks will be different. Raize is focused on the Portuguese market and is very intuitive. There are other platforms, such as Mintos or Bondora. I don't invest all my money on these platforms, but despite the great risks associated with it, it is interesting to allocate part of the investment to them.
Where to invest and save? I think these are the main investment tools you should be using. It is important to inform yourself and make a conscious decision about the risks involved. In English, there is the expression of the investment strategy "a good night's sleep", which means that you should invest in products that give you peace of mind. A good night's sleep and, ultimately, investing in more conservative products is more important than getting a very high return! On the other hand, learn and inform yourself. If you have more knowledge about existing products, you will be more confident and can get a good night's sleep by buying products that were previously considered very risky.