Amazingly, even after we have been through one of the biggest crises in the national economy, the level of savings of the Portuguese is among the lowest recorded. How to interpret this?
There has been more consumption than income, and this increase in consumption is largely supported by indebtedness (we have levels of consumer credit similar to 2008). Some people argue that now it is not worth putting the money in the banks, because the Best Time Deposits (DPs) are not giving a return (there are banks whose interest rate of DP’s is 0%!).
Interest Rates on Time Deposits Continue to Fall
The date released this month by the ECB tell us that the average interest rate of the DPs in Portugal is 0.35%, ie lower than inflation. If our savings decision to go through exclusively for this type of products, then it is almost equal to having the money under the mattress (maybe for the sake of security do not make up the money at home!).
What these data should lead us to reflect on is that if we want to apply our money we have to be willing to take some risk. I am not making an apology for people to put the whole money into a risky product and wait for luck. None of this! Money costs a lot to earn and we can not look at investments as a “game”.
Invest and Diversify
The word of order will always be diversification. Only in this way will we be able to distribute the risk and ensure that we will not lose our savings. As the popular saying goes, it is necessary “not to lay the eggs all in the same basket”. If you have money available you do not have to spend all on consumption, have everything in products without risk, or apply it all in one financial product. It is necessary to reflect before investing and know how to disperse the risk that will have to run.
Should We Continue to Debt?
It’s an issue for us. Should we continue to borrow and compromise the future? Let us not forget that debt is the anticipation of consumption from the future to the present. We’ll have to pay back the money. And the problem arises when we have unforeseen or when we have income cuts. At that point we will have to cut costs, save money on other things (sometimes on essential expenses) … it will not be easy.