Low saving rates: what are the alternatives?
Currently, saving rates are very low. A major cause is the interest rate policy of the European Central Bank. This bank keeps interest rates low to support the economy. It makes saving less attractive than it used to be, and encourages people to spend money. Have you ever considered doing something different with your savings? In this article, we discuss four alternatives of how your savings can still yield something.
1. Pay off your mortgage
Do you have sufficient savings, and are you sure that you won’t need it in the future? In this case, it is advisable to pay off your mortgage with these savings. Savings do not yield a high return at the moment, while you do pay a high amount of interest on your mortgage. So, it is beneficial to invest your savings in your mortgage.
It is wise to discuss this with your financial advisor in advance.
2. Pay off expensive loans.
Loans do cost you a lot of money. They are more expensive than the amount you earn on your savings. Why not pay off your loan with these savings? You will save interest and tax on capital in box 3.
3. Complement your pension.
If you can prove that your retirement allowance is not enough, this option might be interesting for you. When your pension is not sufficient, you are allowed to set aside an amount for your annuity. This amount is deductible from your taxable income. If your pension payments are taxed at a lower rate than the current deductible annuities, supplementing your pension might be an interesting option for you. The deductible amount depends on your personal situation. Here you can find which amount is deductible.
First, please note that it is a risky option. The more risk you take, the higher the return can be. When you invest in a green fund, you are eligible for a tax reduction. These are also known as green investments.