by Costas Chryanthou

Created on: July 12, 2008   Last Updated: January 12, 2010

Naturally saving would be the key to wealth. This said, a person needs to have more money coming in than they do have going out. Saving needs patience, discipline, and a general know how to save money properly. It  is no good saving 100$ every week and putting it underneath the bed. Amounts should be saved with reputable financial organizations that attract a high rate of interest payable each year.

The wealth aspect depends on the size of the savings. $10,000 does not make someone wealthy. Though saving $10,000 a year for thirty years would play a good part in allowing someone to be partly considered as wealthy. This point said, is true as the level of interest paid after a saving term of thirty years at a rate which is (higher than the inflation rate), would double or treble the amount saved over time. This is known as compounding interest which adds to the capital invested and that over time will earn additional interest. Alternatively a saver can choose to have the interest earned paid into his/her bank accounts.

A saver needs the capital each month or in a lump sum first of all to invest, though a saver would then be faced with a situation or task of choosing the right investment that is suitable for a given term or duration of time. The choice is quite large, in that on line savings accounts, branch, postal, telephone banking accounts are all available, and all offer different rates of interest and terms and conditions.

As a rule, people with a combination of existing debts and savings should not have money held in savings accounts. This is based on that the rate of interest charged on debt is far greater than the interest paid on savings accounts. It would be wasting valuable cash for a saver to allow this to happen in practise.

Another rule of thumb is to avoid saving all capital available for savings into just one organisation. If the bank for example goes bust, then this would does not guarantee that a saver will recover all of his/her money. There maybe a limit of amounts recoverable in this situation. Also the rates offered on savings tend to be lower than those potentially made by investing in the stock market. Therefore though the savings offers a steady stream of interest earned, the stock market also is another consideration to place some cash in this area. Though if a slow steady approach is needed by a saver, then the savings approach is most worthwhile route to take.

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