8 Alternative Ways to Save Money

To help you navigate the often confusing, at times risky world of alternative savings, we’ll look at 8 of the more unconventional ways to save money in 2022.

Please be aware that this is NOT financial advice.

1.    Equities

Equities like stocks and shares remain a popular place for savers to put their cash, and generally speaking, such assets perform better than cash savings over long periods. Of course, there are risks involved in equity investing, so careful research and due diligence are needed before you part ways with your hard-earned savings pot.

Pros

• On average, equities perform better than cash over the equivalent period

• You can spread the risk of losing money by investing in a range of equities

• Potential to make significant earnings on your investment

Cons 

• Equities are considered a high-risk savings strategy, and you could lose some or all your savings

• Equities don’t perform as well when interest rates are rising

• The value of stocks and shares can be influenced by a huge range of forces, making them especially volatile

2.    Exchange-Traded Funds (ETFs)

Those looking to invest on the stock market in a low-risk way should consider exchange-traded funds (ETFs). This is when you effectively invest in a package of stocks across a broad range of industries, providing greater protection should sector-specific crashes affect share prices. A benefit of ETFs is that you can choose your level of risk, so there’s more certainty about retaining overall asset value.

Pros

• A simple way to invest on the stock market while diversifying your assets

• A broad range of ETF options means you can choose your level of risk

• Diversification means reduced risk of losing money

Cons 

• ETFs carry the same risks as general equities; you could still lose all your money by investing poorly

• When investing in a gold ETF, the asset is not owned by you but by the trustee.

3.    Unit and Investment Trusts

Unit and investment trusts are similar to ETFs, with the key difference being that they operate through a trust. The trust or fund manager will pool resources from trustees and invest in well-performing assets, including a mix of bonds, shares, and property funds. Typically, trustees receive a quarterly or biannually income on all earnings made across the portfolio of assets.

Pros 

• Fund managers typically target well-performing assets

• Potential to make gains and receive an additional income

Cons 

• Earnings aren’t always guaranteed, as trusts tend to focus on low-risk assets

• As with other investments of this kind, there’s still the chance of losing money

4.    Government or Corporate Bonds

Bonds have long been a popular way of storing money with the added bonus of earning interest on the money you lend. Typically, governments or companies request money which you issue to them as a loan, which they then pay back within an agreed timeframe with added interest.

Pros

• Predictable returns over a set period of time, so you get tight control of your money

• Lower risk than shares and stocks, particularly when dealing with stable organisations

• Potential to make sizeable earnings as interest

Cons 

• If you want to make significant earnings on your savings, bonds may not be the most lucrative option

• Dealing with unstable organisations carries a risk

5.    Peer-to-Peer Lending

Peer-to-peer (P2P) lending is comparable to bonds with the key difference being that you’re lending money to individuals, and not just governmental bodies and businesses. You can still earn interest on the loans you issue, but there are more risks involved. Peer-to-peer lending is generally managed by P2P platforms, through which you can easily manage different loans and revenue streams.

Pros

• Potential to make steady earnings

• Growing number of P2P platforms offers lots of opportunities to invest

• Most P2P platforms are now regulated by the FCA

Cons 

• Riskier than bonds since you’re dealing with individual lenders

• P2P platforms aren’t covered by the Financial Services Compensation Scheme, so you could lose everything if a platform were to collapse

• Requires careful management, and can be a steep learning curve for those unfamiliar with this type of lending

6.    Crowdfunding

The popularity of crowdfunding has risen astronomically in recent years, and could be considered a high-risk way to put money aside for the future. It essentially involves speculating on new and upcoming businesses and projects, backing them through crowdfunding sites to help them realise their ambitions for growth. Get it right, and it can be one of the fastest ways to grow your money.

Pros 

• Allows you to support the businesses, projects, and initiatives you care about

• Potential to make sizeable earnings if the company gets off the ground

• You might receive gifts, products, and early access to new tech by supporting some funds

Cons

• No guarantee of future earnings

• Crowdfunding is speculative, so there’s a risk of losing money

7.    Cryptocurrency

Cryptocurrency may remain a volatile and highly divisive asset class, but there’s no denying that these types of digital currencies have made a lasting impact on the economic landscape. If you’re interested in investing in crypto, you need to consider the risks involved and perform the appropriate due diligence before parting ways with your cash.

Pros

• High risk, high reward savings opportunity

• Blockchain technology that underpins cryptocurrency is generally very secure

• Since the value of crypto is based on global demand as opposed to national inflation, it could help you stave off the negative effects of rising inflation

Cons

• Volatile and highly risky investment, with the potential to lose all your money

• Not proven as a secure, long-term investment

• Steep learning curve attached to understanding and investing in cryptocurrencies

8.    Gold and Precious Metals

Gold and precious metals have been used as a means of hedging against inflation for decades, and they are largely considered one of the safest places to store your money in times of economic uncertainty.

Pros

• Gold and precious metals are among the best lines of defence against inflation

• Reliable money that will hold its value over time

Cons

• Gold doesn’t offer the earnings potential of other investment assets

• The value of gold can go up or down, meaning its spending power could also be worth less.

At Glint, we make every effort to demonstrate a balanced conversation between gold, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn’t 100% risk free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.
 
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