With interest rates hitting 0% and an average yearly inflation (the decrease of buying power) of about 2%, the money you saved is being eaten away by time.
In this article we’ll therefore be exploring 6 low-risk ways how you can get the best interest rates on your savings, making sure to save and preserve your money while also steadily growing it.
The list is ordered by recommendation, from least to most recommended:
1. Switching banks and trying to find the best savings account conditions
(+ sign-up bonuses)
Most people will try to tell you that your bank choice is poor, and recommend you another bank that may offer slightly higher interest rates and perhaps even a nice sign-up bonus.
The problem: those slightly higher interest rates are still way below yearly inflation, and while a sign-up bonus is definitely nice to have, it certainly isn’t a long-term way to grow and preserve your saved money
2. Certificates of Deposits
Certificates of Deposits (CDs) work just like a regular savings account, but with a catch: the money is locked up for a certain time period agreed on before, usually about 1 year.
This gives the bank certainty and more time to speculate with your money, thus also allowing them to pay you back higher interest than say on a regular deposit account.
In current market conditions, those slightly higher interest rates are still way below inflation though, and while a CD is definitely better than just a regular deposit account, it’s still far from perfect.
3. Opening Several Certificates of Deposits
On forums and sites like Reddit you will find a lot of people suggesting you just open several certificates of deposits to become more flexible with withdrawal possibilities.
While that may ease the pain of having all your funds locked up for one year, it also makes matters a lot more complicated - and may affect your credit score negatively as well.
That also won’t solve the problem of inflation and interest rates that can’t compete, and not only won’t make your money grow, but actually still decrease in value over time.
4. Making calculated, low-risk & diversified investments
Sound like a lot of work? That’s because it is. Gold, bonds, ETFs and even small amounts of riskier investments like stocks and Bitcoin all belong to a well-diversified investment portfolio.
If you put in the work required though, this can be very lucrative: you can expect a year over year growth of about 10%, with some volatility and risk of course - but since you have your money diversified amongst different asset types, that risk is mitigated.
Still not a great option for the hard-working family type guy with little time to spend reading and learning everything about dozens of different assets, while still not being sure about the right investments to make. This option can indeed be lucrative, but also requires a lot of work.
5. Peer-to-Peer Lending: LendingClub
It is no secret that banks make money by lending to people against a certain interest rate.
If you have heard about FinTech (financial technology) companies booming, you might have also come across the concept of peer-to-peer lending: people, not banks, lending money to other people themselves.
The largest company in that market is LendingClub, who offers about 5% in interest and does most of the heavy-lifting for you. Not only are there plenty of people ready to borrow your money already, but they also screen their applications for creditworthiness and allow you to spread your money across multiple borrowers.
However, you still are exposed to substantial risk, since all personal loans are not insured. Meaning, if a borrower can’t pay back their loan, the platform won’t jump in and refund you your money anyway - it would be gone.
So, while peer-to-peer lending certainly requires a lot less work than building a completely diversified investment portfolio from scratch, you would need to have a certain risk tolerance. Not really what we are looking for.
Ideally, you would have the best of both worlds: the high annual interest a well-diversified investment portfolio or peer-to-peer lending can achieve, with the little effort and insurance certificates of deposits or regular savings accounts offer.
Which leads us to the next option:
6. Our most recommended choice: Cake Lapis
Cake Lapis offers exactly that - the best of both worlds.
With Cake Lapis, you have a guaranteed interest of 11% yearly - and the best part: it is very easy to use, a matter of 10 minutes of work until you can start earning and you don’t only have extremely low risk, but your money is also always fully insured.
This is how it works:
You deposit your money at Cake, a rapidly growing financial technology company.
It is then not lent to risky regular people, but instead, to large institutional partners, mainly large exchanges, who in turn lend it to private investors against a certain fee per hour.
This makes your risk very, very low. For you to lose any money at all, the whole exchange would have to go bankrupt. And even in the extremely unlikely event that this happens, all your assets are fully insured by certified custodians, so your risk is practically 0%, while your annual interest is very high.
How to start earning right away (max. 10 minutes of work):
- Sign up at Cake: https://pool.cakedefi.com/#/register
- Go to your inbox, open the email from Cake and click on the button to verify your email address
- Verify your identity: https://pool.cakedefi.com/#/me
All done! You will then receive an email on how exactly to deposit your money and start getting 11% interest on your savings, fully insured and risk-free!