Setting a savings goal and achieving it is a very difficult task. There always seems to be a better destination for that money, something comes up to buy, a trip to take or a treat to give yourself. This is the danger of saving and investing on your own, that you only depend on yourself and your discipline.
This is why many times they try to use “shortcuts” that seem to help you save and what they have in common is that these are bills that show up every month to be paid. Then they give you an amount, a due date and the feeling that yes or yes you have to pay them.
But is it the best option?
Don’t sink into the well
In Argentina, access to your own home seems so far away that plans are emerging that promise to give the house to you in comfortable installments, buy as it is commonly called “in put”. There are many marketing of these financing plans to get your house or apartment that pay very accessible installments.
What you need to know before getting into one of those buyout plans is actually this you don’t buy a house, but you finance a developer who has a project she wants to do and, without money, does it with yours. This is when the issue becomes rather illogical, because usually the one receiving the financing is the one paying the interest. Well, These types of plans usually charge you interest for using your own money, something that defies all common sense.
In addition, you are taking on a huge risk, because although they sometimes sell it to you as if you are buying “bricks” or “square meters”, the reality is that you are dependent on the management (and honesty) of the developer. Many of these projects do not come out of the hole and there are people who have lost all their capital because they want to get into this type of scheme.
When you buy a property, it is advisable to do it with a deed to make sure that you are really the owner and that no one is going to take it away from you. You can save and invest money without taking these types of shortcuts that don’t work in the long run.
Savings plan for a car
This mental need that we have to forcibly quote and save due to lack of discipline makes car savings plans very popular ways to buy a car. These types of products cause you to pay a fee that is permanently adjusted to automatic value (that is, you pay for a new car even when you have a two-year-old car) and it generates additional costs such as administrative expenses and expensive insurance that you are forced to rent while you have the savings plan.
In turn, you don’t really know when the car will be delivered to you. Despite the posters promoting guaranteed delivery in installment 2, anyone who has entered into this type of plan knows the headache of getting the car delivered to you. And, as happens with good purchases, these are investments from which it is very difficult to get out. If you want to sell it at some point, you’ll likely have to give up the price, which means a lot of people get stuck paying these plans to avoid seeing that loss.
Life insurance or retirement
The cost of not taking the future into your own hands is never more apparent than with life or retirement insurance. They promise to give you peace of mind in easy installments. You know how much you have to pay each month and if you don’t pay, you’re going to have a problem. But that peace of mind comes at a price. These are products with low returns that in many cases even have penalties if you want to withdraw money before the term they give you. If one invests in terms as long as those considered in this type of insurance, it is logical to expect returns that are more in line with market values.
If you’re looking for them, look at them as insurance in case something happens to you so your family isn’t left unprotected, that’s one thing, but if nothing happens to you and you want to see it as an investment, that’s another . Do you consider the amount you pay for your car insurance an investment? Or what do you pay for social work? It is insurance as it covers you for some contingency with a low probability of happening but a large economic impact. The mistake lies in looking at them as an investment.
An excellent alternative is to put together an investment plan yourself or seek a professional advisor who can help you. to trace your own investment path, without depending on these types of shortcuts that are not productive.
It is very common to want to compensate for a lack of discipline by turning your investments into one more bill that you pay each month. But that doesn’t have to be the case. Those who manage to take control of their financial future will be able to leverage their capital.