Saving and Investing for Beginners

Looking at saving some cash and investing? Hopefully the answer to this question is yes. If you thought that putting your hard earned money to work is something that only financial experts and those “in the know” can do, then you are mistaken. Of course, investing takes some time to research, as you want to have some confidence that you are putting your cash into something worthwhile. In the preceding article, we provided our top tips on how to save money.

Although saving may not seem the most exciting of discussions, if you’re short of cash you can’t even start to think of how to use your extra cash in a smarter way.

Here’s a short recap of some of bitFlyer’s saving tips:

1) Review Your Spending Habits

To get both a micro and macro snapshot of your finances, conduct short term and longer term reviews of your spending habits. Through the help of an app you can track your expenses daily without much hassle, and an annual review can help you see the bigger picture, taking into account the more expensive months (such as in the run up to Christmas) or one off purchases that don’t necessarily figure into day to day calculations. Monitoring your money means you will be more conscious of impulse purchases that you perhaps don’t need to make.

2) Consider an All Cash Diet

The psychological pain of parting with cash is much greater than when paying by card. If you have long ago ditched paper money but are racking up some debt, you might want to try using cash for a period and see how much you’re actually spending.

3) Bite Size Money Goals

The further a goal is away, the more unlikely we think it will be and therefore we give up. Breaking a large goal into smaller milestones gives a sense of achievement more regularly, thus keeping the momentum going.

4) Get a Money Buddy

No matter what physical or mental challenge you are undertaking, it always helps to have a friend there that you can share your feelings with. Find a friend with a similar savings goal and suddenly cutting back won’t seem so bad.

5) Have a No Spend Day

“No spend” here actually means no superfluous spending. As well as saving money on one day a week, this exercise can illustrate the things you may be able to do without. It can also spur creativity, forcing you to find free alternatives to activities you usually pay for.

6) The 50/20/30 Rule

This one is easy to remember and not as spartan as some other savings regimes; essential costs - 50%, financial goals - 20%, lifestyle costs - 30%. By dividing income into categories, you can pay for the essentials, pursue any financial endeavours you wish and also enjoy your money without the guilt of having to squirrel away every cent that you earn.

7) Keep Savings out of your Checking Account

If the money is in your checking account, the temptation is always there to spend it. Move some of your money to a savings account and you will be less likely to withdraw it when for an impulse purchase.

Differences Between Saving and Investing

Now that you have the tools to become a super saver, we’ll take a look at the differences between saving and investing. The benefits of savings are quite self explanatory, if you have some money built up, it is there whenever you need it and is only dependent on the (hopefully) continued good health of your country’s economy. With savings, the easy accessibility can also be a curse, especially if you have poor self control and are prone to impulse buys. What’s more, with savings, the money that you have is just sitting there, and if in a savings account, accruing only very small amounts of interest.

Investing by contrast is more risky, but also comes with greater rewards if done right. In theory, there is no real limit to an investment’s returns. Investing in something you believe in can also give you a sense of ownership and pride. Of course, with a dramatic upside there is also a downside. Volatility in the market, often related to many complex factors can cause you to lose money. Also, with an investment your money is tied up. If some calamity where to strike you and you needed quick cash, getting the money back from your investment would take longer than just grabbing the money from your savings.

In the end, you don’t want to close yourself off to any financial opportunities, but putting everything into one area could be a recipe for disaster if you aren’t careful. Maintaining a mix of savings and investments is the best way to do things, as you still have your rainy day fund, but allow yourself some risk and reward in a measure way.

Choosing Your Investments

So what are the different kinds of investments out there? Here’s a quick rundown of some of the investment vehicles that prove popular.

1) Shares:

A share is a unit of ownership in a corporation and can be issued with or without voting rights within that company. Often shares need to be bought through a middleman called a broker, and at the end of a particular period, shareholders a rewarded with dividends, usually a distribution of profits. If the company is doing well, the share price usually increases and if it is doing badly, the opposite. Shares in the big tech giants Facebook, Apple, Amazon, Netflix and Google (FAANG) had huge growth a couple of years ago, with the share price rising considerably. As well as dividends, they could be sold at a much higher price than what they were bought for.

2) Bonds:

Bonds are usually issued by big corporate interests or governments, and is used for raising money, servicing debts or the maintaining of operations. In the case of bonds, you as are similar to a lender, as a bond bought is paid back to you at fixed intervals, with interest, until the bond is paid off, also known as reaching maturity. The amount you receive in return is typically not as large as what you would be paid in dividends, but it is safer.

3) Mutual funds:

To be part of a mutual fund is to be part of a collective. With mutual funds, a money manager pools together your money, and also that of other investors, to buy up a diverse mix of shares and bonds. Every person involved in the mutual fund gains or loses money in proportion to the amount of money they put in. Because your assets are diversified, mutual funds are less risky than buying shares in just one company, while the rewards are potentially greater than if you just invested in bonds. A big plus is that the person you put in charge to manage your fund is a professional, and will most likely have greater insights than you, especially if you are not well versed in the world of finance. The inverse of this is that you don’t have control over what your money is put into, plus you need to pay fees to the person managing your money.

4) Exchange traded funds (ETF):

ETFs invest in a portfolio of different companies, often in the same sector, and trade like shares on a stock exchange. ETFs follow a share, bond or collection of assets, and then act accordingly. So why not just own the original commodity? ETF shares are usually created as a way for individuals to own a physical commodity, such as gold or foreign currency without having to handle the actual product. A commodity’s ownership is easily divided and distributed through ETF shares. ETFs are often compared to mutual funds but have some key differences, such as the ability to be traded at all times, with lower operating costs and no minimum investment.

5) Cryptocurrency:

Cryptocurrency is a form of investment that has attracted its fair share of praise and also criticism. A commodity that only sprung up a bit over ten years ago, there isn’t much historical evidence to predict where it might go next. The potential for large gains and the fact that with trusted exchanges it can be traded, quickly and easily makes cryptocurrencies a valid investment contender.

Should I Invest in Cryptocurrency?

Especially for millenials, cryptocurrency has enabled them to receive quick returns without having to be versed in the language of finance. While volatility is a concern, buying at the right time could mean a sizable profit, as we saw in the huge rise of late 2017 when Bitcoin hit almost $20,000. However there is another reason to invest. As a long term prospect, many people, especially those from younger generations see the benefits of blockchain technology and its positive application, not just within finance, but also in the health and aid sectors, where the distribution of funds can be made easier and more secure. In the end, if you see the benefits of blockchain and don’t want to miss out on the next rise in price, cryptocurrency investment should be considered. While FOMO isn’t a great reason to invest, it is a good reason to start looking into what everyone else is talking about.

Tips for Investing in Cryptocurrency

If you have decided that cryptocurrency is for you then an exciting world awaits! First, however, take a look at our tips for investing in cryptocurrency, and you’ll know you are prepared to take the plunge.

1) Don’t go it alone. With the Bitcoin blockchain, you can set up your own wallet and trade. At peak times, fees can be high and transactions extremely slow. It is advised to go with an exchange that guarantees your security and gives you the basic information you need to start investing. The bitFlyer exchange is completely regulated, allows you to benefit from a level of security that is also employed by the US government, and provides customer support, specific to the European region. What’s more it also has some of the lowest fees on the market, just 0.15% for Bitcoin transactions.
Whether you decide to choose bitFlyer, or you want to shop around before choosing an exchange, here are some of the questions you should be asking:

  • How long has this exchange been on the market?
  • Who founded the exchange?
  • Have there been any major hacks associated with this exchange?
  • What kind of backing do they have?
  • What are the fees associated with transactions and withdrawals?
  • What is the security like?
  • What do online reviews say?

2) Take the cookie jar approach, bit by bit. Once you have some savings and are looking to invest, don’t put everything you have into crypto straightaway. Putting some spare cash in bit by bit will allow you to get familiar with the market and build up your confidence. Overextending yourself is not advised in any investment area, whether it is cryptocurrencies or government bonds.

3) Don’t get too enthusiastic about altcoins. There are at present over 2,100 Altcoins (all coins other than Bitcoin). While in most markets it makes sense to diversify, in the crypto market the rules are a little different. Firstly, Bitcoin, commanding more than 50% of the market share, pretty much determines the fate of all the other cryptocurrencies. Secondly, many altcoins are just flash in the pan currencies, designed to cash in on the crypto fervour. Many shine brightly for a very short time and then crash out of the market. Most crypto investors agree that Bitcoin has the safest prospects.
However, if you do happen to see an altcoin that catches your eye, consider the following:

  • What project is behind this particular coin?
  • How volatile is the coin?
  • Has the coin been in a constant downward spiral ever since its release?
  • How liquid is the coin?
  • Are there any high profile people that are spruiking the coin?
  • What do the reviews say?

4) Don’t let your emotions get involved. Although this is easier said the done, controlling your emotions and introducing a more rational approach could be your key to success. FOMO, or Fear of Missing Out, is such a commonly used term in the crypto world because things can change so quickly and people get into a frenzy in the hope that they will catch the trend in time. Just because everyone else is doing something is no reason to abandon your own mental faculties.

5) Keep some money handy for a quick change in the market. If you do happen to spot an opportunity and have cleared it with the rational part of your brain, you’ll want to act on it. For this you will need some spare credit that you have kept for such an opportunity.

6) Know your country’s crypto tax laws. The quick introduction of laws to do with cryptocurrencies have resulted in some very uneven legislation. In some countries it is illegal, in others tacitly accepted, while in some it is embraced but subject to conditions that are being revised as lawmakers scramble to keep up. Have a quick read about your country’s stance on cryptocurrencies and you will know how much tax you will be liable to pay on any profits.


Hopefully by now you are confident that you can invest some of your savings in cryptocurrency. With cryptocurrency investments you can not only get returns, but also support cutting edge innovations in the tech sphere. If you’re looking for more tips to maximise your investment performance, click here!


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