This post will shift focus to a different but related topic: managing substantial savings. If you have 10,000 euros or more in the bank and aren't planning on investing it in property, here are some strategies to maximize your financial potential. That's what I would do if I had 10k€ in the bank.
How I would invest 10k euros in 2024 at a glance
Avoid Keeping Most Money in the Bank Leaving large sums in a standard savings account isn't optimal as it earns minimal interest. You can imagine that every euro that is not in the bank is like a worker that is generating money for you, instead of being there in the bank without doing anything.
Maintain an Emergency Fund Keep about one month's salary (or in my case, half a month's salary), roughly 1,000 to 3,000 euros, in your bank account for emergencies. This ensures you can handle immediate needs like car rentals or urgent repairs without hassle.
Invest in Stable and Flexible Accounts Allocate about 40% of your savings to accounts that offer good interest rates and flexibility, allowing you to withdraw funds quickly if necessary. Examples include (The links to the following websites give you and me get between 10€ and 100 USD when you create an account using these ones): Ideally, ensure that your money is protected, like the 100k€ protection that you get when using trade republic since it is backed up by EU banks. This is exactly the reason why the risk of investing the money in flexible accounts from crypto exchanges may have a higher risk associated with it. You depend on the stability of the exchange, and no one can ensure that if the exchanges get bankrupt you can still get up to 100k€.
Trade Republic: Provides 3.75% interest.
Stablecoins: Between 8 and 12% interest per year on exchanges such as Nexo, Binance, YouHodler, Kucoin or OKX. You can also check these guides for a complete comparison of the main exchanges and crypto cards.
Revolut: Offers 2.9% interest, or 3.75% with a 55€ monthly fee (worth it for amounts over 7,000€).
Invest in ETFs for Moderate Returns Allocate 20-30% of your savings to Exchange-Traded Funds (ETFs), such as the S&P 500 or Vanguard. ETFs are generally stable and can provide moderate returns over time. You can use resources like this page on choosing ETFs or this guide on free ETF brokers in Europe to find the best options.
Take Higher Risks for Potential Higher Returns Invest 10-15% of your savings in higher-risk options, such as individual stocks or cryptocurrencies with solid whitepapers and innovative potential. These investments can yield significant returns over time, but they come with increased risk.
Conclusion
Effectively managing your savings involves a balance of liquidity, stability, and growth potential. By keeping a portion of your funds easily accessible, investing in flexible yet stable accounts, and taking calculated risks with a small percentage, you can make your money work harder for you.
In summary:
Keep 1,000-3,000 euros for immediate emergencies.
Invest 40% in high-interest, flexible accounts.
Allocate 20-30% to ETFs for moderate returns.
Dedicate 10-15% to higher-risk investments like stocks and cryptocurrencies.
By following these strategies, you can ensure that your savings are both protected and productive, maximizing your financial growth while maintaining necessary liquidity for emergencies.
I hope you liked this post. If you didn't have enough, here's a nice guide for more ideas on how to invest 10k€.
Comentarios