The chicken or the egg: why talk about investments if we have savings and not the other way around.

Published On: 27/10/2020

At the very start of this text I would like to clarify that its author, being me, is not a financial expert or an economist but a communicator: the lack of information from reliable sources in Bulgarian and the feedback from my clients made me create this type of content.

Talking about financial expertise: this Blog does not claim to be a place to acquire such

а/ in order for me to call myself an expert in any field, I would have to work and accumulate knowledge for at least another 10 years or so.

b/ the cost of Internet access would not be enough to pay for a professional expert consultation.

All of my materials outline a global overview (I use selectively German sources) and reflect my face-to-face communication and experience from actual professional and everyday situations over the past 11 years in Bulgaria For this reason the content is expressed using easy-to-understand language in order to be helpful for everyone living in Bulgaria and those who are familiar of what life is like here, i.e. being aware of the HERE and NOW is crucial. This does not mean that the materials are not based on global information and outlook, on the contrary: however, in my role as communicator, it is very important that I stick to reality.

The reality of Savings and Investments is the topic of this article. Even if you do not use specialized applications, if you do not work with an Office package and do not track your daily expenses, this content can be easily digested and even! applied in practice.

% Future

Savings and Investment are two concepts which are often mistakenly mixed up, substituted or viewed as mutual alternatives. The main aspects of the differences between these are:

  • Where do you keep your money?
  • What are the risks and respectively the opportunities?
  • Do the money “stand there” or “grow”?

Most people in Europe keep their savings predominantly in banks. These in turn invest their clients’ money in companies, which use it to buy new machines, equipment and for product development. Experts call this investment.

A look at the here and now: Do you know where your Bulgarian bank invests your personal funds that you have entrusted it with? Personally, I do not know…

How do bank savings work: the bank keeps our money, which we have lent it and for which we a/ pay “rent” and b/ we give the bank the option to use our money and to lend it to other people, who need funds. The interest, which Bulgarian banks offer at the moment varies. Each of us can find this out.

How does investment work: essentially this is buying something with our money, which would increase in value over time.

There are different investment options: global stocks, ETF, real estate, investment gold, cryptocurrency. Interest is not fixed, however, we talk about growth of value.

Example: If you invest in the top 30 German DAX companies, you can count on an annual profit of 8.4%, investments in the international MSCI World can bring you 7.1% of profit on an annual basis; S&P 500 companies can even bring you a 9,7% increase of your investment. (information as at 20.05.2020).

Where is the Unit-Linked Life Insurance positioned: It combines two of the above, with the respective portion of the sum pushing the scales towards Savings or towards Investment. Unit-Linked Life Insurance offers:

/ to establish the habit and discipline (in us and/or our children) to think about the future, setting aside even a small amount on a regular basis;

/ the opportunity to achieve profitability with our money in a low-risk and passive manner (without requiring five figure investment amounts);

/ to provide for our loved ones: good life insurance companies compensate loved ones in case of a fatal event continuing to allocate the funds as per contract until the insured person reaches a certain age.

/ access to international markets for a minimal administrative charge;

/ individualized choice of funds we invest in;

/ personal consultant at your disposal for opinions, information and references.

/ tax deductions (when provided by an Insurance company and not a bank).

The choice of % Future is individual and if we take into account the following, our decision would have a more beneficial impact on us … and our dreams:

/ Trust: which structure/company/institution/person do we trust?

/ Patience: …

/ Objective and strategy: what is the last thing you decided to achieve and how long did it take?

/ Knowledge: do we know what we are doing?

and last but not least

/ Common sense: do we judge the situation realistically or no so much; did you take into account where you live, what determines the social, political and economic environment…?

 … because the Golden goose as well as any other habit, culture and behavior require care, attitude and time, even if this refers to our own personal funds.


Ognyan Guglev

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