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[EU] Dealing with savings (piefed.social)

submitted 1 month ago* (last edited 1 month ago) by DeliciousDoorknob@piefed.social to c/personalfinance@lemmy.ml

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My partner and I currently have enough savings we could comfortably live off of for over two years, if we had no source of income. This amount is also enough to easily get a mortgage — we've been looking to buy for over a year now, but the housing market is awful.

All those savings are just sitting in our bank account and everyone we've talked to says that's stupid with inflation eating it away. That is true, however we don't know what to do with it in the meantime. Several people suggested investing in ETFs, but neither of us knows much about it. On the surface level, to me it sounds like one needs to invest a lot to see any benefit. It also looks suspiciously like gambling, which makes me uncomfortable. On the other hand, there doesn't seem to be any alternative, except leave the money to slowly rot while we're waiting for a good housing opportunity.

Any thoughts, suggestions?

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[–] mortemtyrannis@lemmy.ml 1 points 1 month ago* (last edited 1 month ago) (1 children)

While yes your money is being eaten by inflation when sitting in the bank, if you’re seriously considering purchasing a house that is the correct place to put your money while continuing to build a deposit but you have to commit to an actual plan.

IMO I don’t think you are psychologically prepared to invest (which is probably the biggest factor). Ironically buying a house is also investing but you’ve somehow created a divide in your mind on those two things which makes me think your risk tolerance is low (that’s ok).

Investing is kind of like gambling but the odds of winning go up every year you stay invested, this is wholly not like gambling.

In fact, no one that has invested long term (20+ years) in a broad based low cost index fund has lost money. The catch is you have to weather storms, GFC’s, life’s incidental hiccups and never withdraw the money even if its value has decreased 50% from yesterday.

[–] DeliciousDoorknob@piefed.social 1 points 1 month ago

While yes your money is being eaten by inflation when sitting in the bank, if you’re seriously considering purchasing a house that is the correct place to put your money while continuing to build a deposit but you have to commit to an actual plan.

We'll most likely need this money in the next year or two, so you might be right there.

IMO I don’t think you are psychologically prepared to invest (which is probably the biggest factor).

I'd say it's more about poor understanding of how investments work than anything else. I've seen multiple people I know lose a lot of money for the simple reason of having no clue what they're doing. Hence my apprehension.

Ironically buying a house is also investing but you’ve somehow created a divide in your mind on those two things which makes me think your risk tolerance is low (that’s ok).

I wish something as basic as housing wasn't used for profit. It's either we're stuck paying more for rent than what our monthly mortgage rate would be and have an unstable housing situation (especially with dogs in the equation) or we commit to paying off a 30-35 years of mortgage.