As a parent, there are so many considerations that come into
the mix on a daily basis. Whether it’s menial tasks (or important ones!)
relating to your children, having a laugh or cry with them, or harking ahead to
the future to see how best to put them through a decent school, it’s fair to
say that there isn’t always much time to think about yourself.
One constant in life, no matter how many children you
end up having, is money, and the on-going battle to make the sums add up at the
end of each month. Of course, that doesn’t get any easier when the young’uns
come into the equation, especially when you consider that it costs, on average,
more
than £230,000 to fund a solitary childhood!
Suffice it to say, those of us who simply get by without any
debt, and perhaps a few extra pennies in savings, have every reason to feel
content with our efforts. But is there more that we can do?
Savings or investing?
Until now, someone like me has always thought that the best
bet is to save, save, save – and leave things like investment to the experts.
The problem is that interest rates on your normal savings accounts are so bad
that – well, you may as well just stick cash under your pillow! I always used
to like ISAs, as they are easy to use and you don’t really have to think too
much about them. But even these don’t offer much joy in terms of interest these
days.
The alternative, of course, is to look towards investing.
Obviously there are loads of ways to do so, but the most popular route is
probably the stock market. A friend of mine who is an avid stock market dabbler
recently described it as like “rolling dice in the casino”. Perhaps he’s just
had a bad day, and obviously there are ways to minimise risk. And many people
do well out of it.
But it does require a lot of expertise and input in terms of
time – and as a parent, well, we don’t have much of that, do we? There are
specialists who you can pay to do the job on your behalf, and there’s nothing
wrong with that. But it means that you probably won’t exactly feel like you’re in
control.
A possible
alternative
One thing I came across recently was peer-to-peer lending,
which I hadn’t heard of before, but it has apparently been around for a while.
As you might have guessed from the name, it basically just involves lending
money to fellow consumers, rather than sticking it into the bank. In return,
well… you get a decent return! You can typically expect to get interest of
roughly 5 – 6 per cent, and because it’s done through an online platform
(rather than a profit-munching middleman like the bank), that’s roughly in line
with the interest rate charged to the borrower. So both parties benefit.
The obvious question to ask is “What if they don’t pay me
back?” That is the risk involved, and you won’t be covered by the Financial
Compensation Services Scheme in this case, unlike when a bank goes bust and
consumers are paid out. But it’s in the interests of platforms to make lending
safe, which is why they go to great measures to ensure that borrowers are
strictly vetted on credit score, that a separate fund is maintained to pay out
for any losses incurred, and even holding an insurance
to cover lenders too.
Money matters
It’s a case of each to their own, and really it all comes
down to your own personal assessment of the balance of risk and reward. It’s
all about setting your own goals, and deciding how important this kind of thing
is. There are plenty of websites which can help you decide whether to save
or invest, but it is ultimately a personal choice.
It’s important that this doesn’t become consuming either,
both in terms of time and focus. But at the same time, after saving hard to
squirrel money away, you want to be sure that that money then works hard for
you, so that you can rather worry about making the good times with your loved
ones even better.
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