Nearly everyone saves
Nearly everyone saves, especially in Belgium. And that's all for the better too, because a buffer to cover unexpected expenses could come in handy one day. If you have a savings account, that's great! So, be sure to check out our top savings tips:
• The ideal size for a savings buffer depends on your personal situation, but a good rule of thumb is to keep the equivalent of three to six months' net salary in reserve.
• Make it easy for yourself by setting up a monthly standing order to steadily build up your savings buffer.
• Look into the possibility of a tax-advantaged savings scheme (such as pension saving). Make sure you use it optimally: tax relief can be as high as 30% of what you pay in each year.
But don't forget that, due to inflation, you lose purchasing power over time because the interest rate on your savings is lower than the rate of inflation. You can let your money work for you in periods of high inflation.
A practical example:
Suppose you have 10 000 euros on your savings account. With inflation at 2%, your 10 000 euros would be worth about 200 euros less after a year. However, an interest rate of 0.11% on that sum of
10 000 euros would generate just 11 euros in interest. The result is a loss of purchasing power.
You can, however, let your money work for you in periods of high inflation and lower interest rates.
If you're already devoting money to personal savings and retirement savings, now's the time to put your money to work! The next step you can take to potentially boost your return is to invest.
That entails certain risks, however, so it's best to invest for the long term and with money you can do without.
Most people think that the long term is important because it helps smooth out risks. Statistically speaking, there are more good than bad years on the stock market, which means that if you invest for long enough, positive effects will basically erase the negative ones. Besides benefiting from that effect, you earn compound interest, thus enabling you to benefit from the interest-on-interest effect too (also known as the 'capitalisation effect'). That means that you earn interest on the interest you've already received. In other words, the potential return on your investment is added to the capital so that it too can generate a return. That way, you should end up with more money than you would have if the income had been paid out each year. That results in an ever-accelerating exponential curve. So, the earlier you start investing, the greater that effect will be and the more your assets can grow.
One way of boosting the earning potential of your money is to take out an investment plan.
What is an investment plan?
An investment plan provides you with the opportunity to invest a certain amount of money automatically at set intervals over time.
The benefits of an investment plan
1. More chance of getting the time right
With an investment plan, you invest over time, not just once. Because you don't invest all your savings in one go, you don't have to worry about the right time to invest. Sometimes you buy when prices are low and at other times when they are higher. This considerably reduces the risk of bad timing because you build up your investment on the basis of average prices.
2. Emotional investment cycle is neutralised
When prices drop, many investors sell as a precaution, whereas when prices rise, they tend to jump on the bandwagon and buy more quickly. With an investment plan, such emotions won't come into play and stress or excitement won't cause you to buy at the wrong time.
You choose the amount you want to invest (starting from 25 euros). Moreover, you can adjust your future investments and stop them if you wish. The fund units you purchase can also be sold whenever you want at the then prevailing price. Sometimes that means selling at a lower price than when you bought them.
Why start investing at KBC?
- Huge product range
We have a very broad range of investment solutions for new investors, ranging from time deposit accounts to investment funds, and we introduce new investment opportunities every month.
- Effective know-how
We are known as a bank for investors and lead the market in Belgium for investment funds and insurance-linked investment products. If you're a starter business, we'll be happy to help get you off to a flying start.
- Highly accessible
If you'd like to start investing, feel free to make an appointment at your KBC branch or contact a member of staff via KBC Live. You can also get started in KBC Touch and KBC Mobile.
Fear of heights? We’re here to help you on your way
It isn't easy taking your first steps in the world of investing and you're bound to have a number of pertinent questions. We've provided some answers below to help you get started.
Can I start out by investing a small sum of money?
Yes, you can. You don't need a need a large amount of money to get started. With an investment plan, you can start investing from as little as 25 euros a month. You are free to change that amount at any time or to put your investment plan on hold and start it up again later. At KBC, you can even invest your spare change in 10 euro instalments.
Is it complicated to invest in an investment plan?
No, it isn't. If you invest in an investment plan, you automatically put a fixed sum of money every month into an investment fund that is looked after by fund managers. By opting for an investment plan, you allow much of the work to be done for you.
Can I lose money by investing?
We can never rule that out. Return is inextricably linked to risk: the higher the return you want, the more chance you have of suffering a loss.
Limit your risk by following these two smart tips:
• Don't put all your eggs in one basket: an investment plan enables you to invest in a fund that invests in a mix of investment instruments (i.e. shares, bonds, etc.).
• Don't invest a large sum of money all at once, but instead spread your investments over time. An investment plan allows you to invest a small sum of money each month, so that you are less dependent on the timing of the investment.
Can I easily modify my investment plan?
Yes, you can. With an investment plan, you choose the amount you want to invest each month. You can start from as little as 25 euros a month, increase or lower the amount you invest (may not be lower than 25 euros), put your plan on hold and start it up again. It is also possible to sell your investment, though there may be charges involved.
Is an investment plan expensive and does it attract additional charges?
There are no additional charges associated with an investment plan. What you do pay are the usual taxes and charges for the relevant investment fund.
Does it take long to get started and what do I have to do?
There are several ways to quickly set up an investment plan, including in KBC Mobile.
Starting to invest is easy with Mobile. You decide whether to receive advice, to invest a fixed amount every month or to invest your spare change.