Both savings and investments have a place in your financial plan. Investing is more suitable to meet longer-term financial goals and can offer several benefits, such as helping your money outpace inflation and building wealth. In this short article, I'll give three key reasons why you should consider investing.
1. Outperforming inflation
Inflation is a term used to describe a broad increase in the cost of goods and services over time. Inflation reduces the purchasing power of money, causing its value to drop. Investing gives your money a chance to grow and maintain its purchasing power over a longer period. If you plan to save money for the future, investing could provide a better return than just keeping your money in the bank.
Learn more about inflation eroding money's real value on deposit <link to other article>.
2. Helps you meet long-term financial goals
Investing can help you reach big financial goals. Investing offers the potential of higher returns than cash savings over the long-term. You can use the returns on your investments to help you achieve major financial goals, such as buying a home or putting your children through college.
3. Can help you save for retirement
Prioritising your pension as a key financial need will help you enjoy a comfortable retirement. A pension offers immediate tax benefits. The earlier you start saving for retirement, the sooner you can begin capitalising on the effects of compounding returns.
4. Can help with tax planning
One of your financial goals may be to share your wealth to provide financial stability and support for future generations. A range of savings options allow you to do this:
1. An Aviva Savings Plan endorsed under Section 73 of the Capital Acquisitions Tax Consolidation Act 2003 allows you to pay your beneficiaries' gift tax when you transfer assets while you're still alive.
2. Our new Children's Savings Investment Trust allows you to take advantage of the annual small gift tax exemption. Here, you can gift up to €3,000 tax-free in any year (€6,000 per couple) to your child, grandchild, or anyone under 18.
3. We also offer a simple third-party payer solution if you wish to gift up to €3,000 tax-free to a beneficiary over 18 in any year.
Of course, tax laws are subject to change, it’s important to check revenue.ie for the latest information. You should seek professional tax and legal advice to satisfy yourself of your tax position.
How to invest
Investing isn’t just for the wealthy, it’s a powerful way for anyone who wants their money to work hard for them. With Aviva’s Savings Plan you can invest from €100 a month and if you have a lump sum you can invest in Aviva’s Investment Bond from €10,000. A Financial Broker is the best place to start your investing journey. They’ll help you choose the right investments to help you get the results you want.
Watch our short video to learn more about Savings and Investments from Aviva