Saving is one of the fundamental aspects that enables us to enjoy good financial health, as it allows us to respond better to unforeseen situations, to achieve aims such as buying a car; and, ultimately, to have greater stability throughout our lives. Here are some ways we can invest our savings.

When we talk about savings, many people automatically think about the amount of money they have in their current accounts after receiving their salaries, for example, and meeting their payment obligations and other needs, such as the weekly supermarket shop and paying the rent. This is static money that serves to increase our financial capacity to respond to any unexpected situations that may arise, but which have no further consequences, such as the breakdown of a household appliance.

For this reason, many people have thought about putting part of their savings into investments that will earn them profits after putting the money to work. If they decide to do so, they should take a number of basic aspects into account. Next, we review these and what they mean:

• Return: the percentage of gains or losses in relation to the capital invested.
• Risk: the degree of security of an investment, the lower the risk, the lower the profitability.
• Volatility: a measure of the behaviour of a financial asset, such as a share. Thus, it shows how the price has evolved over a given period, allowing us to see the risk of the investment.
• Liquidity: the ability to transform an asset into cash.
• Term: the period of time in which a certain return is reached.
• Diversification: one of the terms most discussed when we talk about investments. It is a technique that involves distributing our money into different assets. This will substantially reduce the risk of losses.

Are you planning to invest part of your savings? In this Finance for Mortals article (in Spanish), you can find 5 tips on how to do it.

Where can I invest money to generate more income?

Now that we have seen the aspects we need to consider if we want to invest, next we review some of the most popular options that can help bring our savings to life.

• Opening a savings account: this banking product is part of the bank accounts category; in this account, the customer deposits a certain amount of money, either regularly or on a one-off basis. Depending on the rates established by the bank, this money will generate interest for the saver. Although it cannot go into overdraft, unlike a current account, it is similar in other aspects, such as the immediate access to the money through a branch or cash machine. With this type of account, the bank may charge fees for opening and maintaining the account or other actions arising from its management.
• Taking out a pension plan: this is a product in which the customer pays in a certain amount of money, either regularly or on a one-off basis. The pension plan managers make a series of pre-agreed investments in order to make the money generate profits. When the beneficiary reaches retirement, they may withdraw their money, if they so wish, through a series of monthly payments, i.e. in the form of an income. However, they also have the option of redeeming all the available capital as a lump sum.
• Joining investment funds: in this case, collective investment institutions (CIIs) combine the contributions made by investors in order for professional managers to manage them in different products or projects to obtain a fixed, variable or combined return.
• Buying government debt: this is one of the ways in which a country's government regularly obtains funding. It consists of the loan of money by an investor to a government entity, which in exchange will repay the same amount together with interest after the agreed time period. This period varies depending on the type of debt purchased: for example, in Spain there are government bonds, issued in the long term (between three and five years) and Treasury bills, issued in the short term (less than two years).
  The bonds include green bonds: a type whose purpose is sustainable. They are thus used to obtain funding for the development of projects to help combat the devastating effects of climate change, for example. This type of investment incorporates ESG criteria, an acronym that refers to the environmental, social and governance aspects that make an investment sustainable.
• Buying shares in private companies: one way to put part of our savings to work is to deal on the stock market, through the purchase and sale of shares; these are the units in which a company’s capital is divided. This option cannot be carried out directly by the person concerned, but must be done through the services offered by authorised professionals known as stockbrokers. Although all our financial decisions require prior knowledge, due to the constant change in the world economies, it is particularly important here.
• Holding other assets: there are assets that belong exclusively to the digital world such as cryptocurrencies, characterised by cryptographic encryption that certifies their ownership and by the management of these currencies through blockchain technology. Investing in these assets is a high risk due to their high volatility.
• Buying property: when we talk about buying physical assets to invest, we generally refer to the acquisition of property, i.e. tangible objects that cannot be transported from one site to another. These are houses, business premises, etc. If we have savings, we can invest part of them in the purchase of a property that we can then rent to generate income.
  Over time, new ways have emerged to acquire properties, such as crowdfunding, a form that emerged over a decade ago, in which each investor acquires a part of the property, thus facilitating construction projects. Once the property has been built and sold, the investors would recover the money invested plus a share of the capital gains. If you want to know more about property crowdfunding, you can read this article (in Spanish) in Tu Futuro Próximo, Santander Consumer Spain's blog.