Jaspreet Singh: ‘Your Savings Are Losing Value’ If You Do This
Written by
Martin Dasko
Edited by
Gary Dudak
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With stubborn inflation numbers over the last couple years, the price of almost everything has gone up, making everyday items feel more expensive. It may even feel like you can’t keep up anymore, because we’ve all felt the impact one way or another.
This is why it’s more critical than ever that you don’t leave your money in a savings account earning minimal interest. You have to get proactive about your investments because the value of your money is likely to decrease if it’s just sitting around in a bank account or if you’re not making any money moves right now.
Here we will examine how your savings may be losing value, according to money expert Jaspreet Singh, and what you can do about this.
How Your Savings Are Losing Value
“Do not save all of your money. If your savings are not growing faster than inflation, your savings are losing value,” commented Singh, CEO of Briefs Media and host of The Minority Mindset Show, in an exclusive interview with GOBankingRates.
“One of the general goals of investing is to outpace inflation for a positive real return,” remarked Bryan M. Kuderna, CFP and founder of Kuderna Financial Team. “Amid high inflation, fixed income can lag and may not immediately keep up with inflation. If the Fed is raising interest rates to tame inflation, this often has a negative impact on the stock market in the near-term, leaving both sides in trouble like in 2022.”
The simple summary is that if your savings aren’t growing faster than inflation, you’re losing value on your money. While it may not feel like you’re technically losing money at the moment, your purchasing power is decreasing. This is why it’s crucial to find ways to modify your investments to outpace inflation. Even though the inflation figures aren’t as rampant as last year, it’s clear that they haven’t dropped to a satisfactory level either.
How Can You Fight Inflation?
“A quick tip to help with this, use a high interest savings account! Some high interest savings accounts are paying around 5% interest annually, and these banks are FDIC insured. Instead of just saving your money, you need to also think about investing your money. I prefer cash flow producing assets,” Singh elaborated in the interview with advice on how to ensure that your money isn’t losing its value.
The positive side of rate hikes is that you can earn more interest on your money by searching for higher rates so that you can outpace inflation.
Kuderna also shared his insights on fighting inflation and ensuring that your money doesn’t lose its value. “Over the long haul, the stock market (equities) is a great way to keep pace or outpace inflation. In the immediate tumult of inflation, commodities and utilities are often a safe haven. I-Bonds are also another consideration, as they can provide fixed returns that immediately reflect inflation. Toward the end of a rate hike cycle, higher interest rates can bring fixed income back in vogue, and if rates are eventually cut, those bonds can provide lasting yield.”
What Should You Do With Your Savings?
It’s more important than ever that you take the steps needed for your funds to grow. The following are the two best moves for your finances during this challenging period.
Invest Your Money
“High inflation disproportionately benefits asset owners and it hurts consumers,” remarked Singh on the importance of investing right now. “In other words, inflation makes investors richer and it makes regular people poorer. So, what can you do? Own investments.”
It’s more essential than ever that you invest your money instead of waiting to make a move. Here are some suggestions if you’re confused about to invest your money right now:
- Go with safe and reliable investments like index funds.
- Look into diversifying your portfolio.
- Consider physical assets.
- Watch out for speculative assets.
- Learn about different investment opportunities that are available.
- Don’t panic when the inflation news leads to market sell-offs.
- Keep a long-term perspective when investing.
- Avoid the media hype around a specific company.
Singh mentioned having 2% of his investment portfolio in physical gold since high inflation brings the dollar’s value down, which leads to the price of gold increasing. It’s worth looking into diversifying your investments to take advantage of this unique climate. However, as always, it’s essential that you do your due diligence and consider consulting a licensed financial advisor before investing your money.
Invest in Your Education
“Investing $10,000 into your income means investing in new skills and education that can help you earn more money,” Singh commented on the importance of investing in yourself. “Investing in your education can lead to 20% to 500% returns.”
The truth is that the best investment will often be investing in yourself, as this provides returns in the future. During this confusing period in the market, you could use your funds to improve your future earning potential. Here are some of the ways that you can invest in your education right now:
- Consider going back to college to learn a new skill. You could use this time to make a career pivot or to upgrade your education to land a higher-paying gig.
- Look into opportunities available at your company. You can find out if your company has any courses they would recommend that you take.
- Try to learn a new skill that you could freelance work in. You could increase your income with freelance work by picking up a skill like writing, editing, photography, or something along those lines.
- Attend networking events in your field. You could use this time to grow your network and find out what opportunities exist that you could follow up on.
- Take some certification courses. You can earn some certificates or pick up a new interest, from personal training to learning some basic CPR to help you at work.
While looking for higher interest yields on a savings account can be exciting, there’s nothing like investing some money back into yourself to ensure that you get more than a 5% return on your funds.
Closing Thoughts
“The biggest money mistake people make is not doing anything,” Singh stressed the importance of taking action.
While it’s highly frustrating to watch the prices of everything increasing around us, we have to find ways to be proactive about this. Fortunately, if you start taking a proactive approach to investing right now, you’ll be further ahead, and your future self will thank you.
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