Investment and Insurance Products Department
Financial security of yourself and your family is a broad subject. You need to consider many aspects and prioritize them based on, to a great extent, your age. The key solutions, however, are always the same and worth implementing whether you are 25 or 65.
The so-called financial cushion will let you cover unexpected expenses from your own funds instead of taking out another loan, which, in the end, would be a much greater burden for your budget. The amount of the emergency fund is a matter of individual preference and capability, but it is recommended to have at least six times your monthly income at your disposal. Here you will find out more how to build you financial cushion:
Let’s take this opportunity to disprove the myth that you have to be very familiar with all listed companies. The most successful financial investors such as billionaire Warren Buffett recommend buying index funds regularly, without worrying about the fluctuation of their valuation. An index fund is a type of an investment fund which tracks and follows a certain fund, e.g. the Polish WIG20 or the American S&P500. Since it does it almost automatically, its management costs are very low, which exerts a great influence on its long-term results. In Poland, you can buy index funds following WIG20, S&P500 and the German DAX. They allow you to diversify your investments across different markets, also outside of Poland, at a low cost. To find out more you should contact the brokerage house that will help you build your investing strategy.
This financial instrument is not very popular in Poland, which is a pity, since it is a very effective protection against inflation. Four-year and ten-year treasury bonds, for instance, pay out interest calculated as the value of inflation for the past year + fixed percentage margin. Thus, the interest rate is variable, but always above the inflation, which prevents your savings from losing on value. A 50-year-old should slowly shift to safe financial instruments. At this age, you might also need cash, e.g. to finance the education of your children, who are slowly leaving the nest. Therefore, you might want to have your savings at hand. At 60 (a few years before the statutory retirement age) it would be good to deposit a majority of your savings in safe instruments. This will allow you to avoid potential turmoil on the financial markets just years before the autumn of your life, and exploit its charms without any concerns. More about preparing for retirement you can find here: