How to save and accumulate money for Haitians: 8 effective ways to increase wealth + tips for beginners in investing from Senior software engineers

8 ways to get rich

I have been actively investing for almost 5 years. Recently, I have been sharing my experience with colleagues, mentors. Recently, we even created a Telegram chat for like-minded colleagues.

I want to share my thoughts and experience on how to increase your money in these difficult times. These tips are adapted for Ukrainian realities, because most of the investment books we read are American. The stock market and other investment tools are very developed there, while in Ukraine it is just beginning.

First of all, the stock

A reserve fund or «cushion» is a classic and most necessary option for accumulating money. A reserve is needed for urgent needs if you suddenly lose your regular income. Especially now, during a war. Creating a «cushion» for yourself is the first thing.

Such a reserve is made in case, for example, of job loss or the occurrence of some unforeseen event.

How to save? You can save a certain percentage of what is left after all mandatory expenses — 20-30%. Or, in the classic version, experts usually advise — 10% of total income.

Assistance to the Armed Forces of Ukraine is also an investment

The war is going on, boys and girls are fighting for our freedom, so we need to have a separate expense item for helping the Armed Forces of Ukraine. I set aside 10% of what I can save for this. For example, at the beginning of the invasion, I helped a mobilized colleague with Starlink, and now I pay monthly for its use.

It is convenient to set up automatic transfers every month. I also send a certain amount every month to the Prytula and Sternenko foundations.

We invest in ourselves

I recommend spending up to 10% of your savings on training and development. This helps you become a better professional and, accordingly, earn more. And the more you earn, the more you can save and invest.

Another important area in IT is certification. Cloud certifications are now very much in demand. It’s great that our company helps and pays for these certificates, and in the long run, this can also help you get a higher salary. The certificate itself plus training courses can cost up to $500.

I also buy subscriptions to YouTube channels of bloggers who talk about investments. This saves a lot of time, because it’s hard to keep track of everything yourself, and you get ready-made advice and analytics. For example, I’ve been subscribed to the channel «Millionaire in 7 Years» for a long time. The subscription costs $10 per month, and I think it’s a small amount of money for such information. When choosing a blogger, it’s important that the person invests himself and shows it, for example, screenshots from his offices.

I recommend the following bloggers

• https://www.youtube.com/@millionaire7years
• https://www.youtube.com/@FamilybudgetUa
• https://www.youtube.com/@cryptokyiv

Own or rent your own home?

Every family needs somewhere to live. If you don’t have your own home yet, you can save for it. I allocate 10-20% for this. When you already have a home, you can consider buying real estate as an investment and then allocate about 10%.

Many people say that it is more profitable to rent an apartment now than to buy. And I agree: in Ukraine, when you don’t know what will happen tomorrow and where you will live, it is better to rent housing.

If real estate is an investment, you don’t have to save up for an entire apartment. There are funds where you can invest in part of the housing and then receive a percentage of the income. There are examples of how you can buy a large apartment in Kyiv and then divide it into small smart apartments and rent it out daily. It turns out that people earn twice as much from one apartment than if they rented it out monthly.

We save money and help the country

Deposits are also a classic. I think each of us has put money on deposit in a bank at some point. This is when you give the bank part of your salary, and it pays interest for it. Now, making a deposit online is very simple. Two clicks and it’s open.

Banks give up to 13-15% per annum in hryvnia. However, deposits also have their drawbacks. The main one, in my opinion, is that without the possibility of early termination, the funds are «frozen». If an urgent need arises, it is impossible to withdraw money or you have to pay a fine. Therefore, for a deposit, you should use those funds that you are ready to forget about during the term of the contract.

The second drawback is the discrepancy between the nominal and real interest rates. The actual income will be lower due to taxation. Currently, the personal income tax is 18%, and the military levy is 5%, which in total gives 23%. Therefore, I personally consider deposits as a less profitable investment.

Unlike deposits, military bonds retain the same function, but have significant advantages. These are funds that you provide to the state, and it undertakes to return them with interest. Firstly, the yield can be over 17%. Secondly, by buying bonds, you support the Armed Forces of Ukraine. Thirdly, this income is not subject to taxation. However, given the level of inflation, the instrument allows you to save hryvnia rather than make a profit.

Stock market

I have allocated 20% of my investment portfolio to stocks. Stocks for Europeans and Americans are as classic as a deposit for us. This market is over 300 years old, and it demonstrates predictable behavior. For example, the S&P 500 index (an index of the 500 largest American companies) has been steadily growing by an average of 10% annually in recent years, and by 93% in five years, that is, it has almost doubled.

But there are brokers that allow you to buy fractions of a stock (for example, one-tenth or one-fifth). Investing even in this ETF can be a good start.

If you want to try to beat ETFs, you can consider stocks of individual companies. For example, stocks of leading technology giants Apple, Amazon, Meta show a return of more than 10% per annum. Therefore, to diversify your portfolio, I would recommend paying attention to them as well. For example, excluding the recent price drop, Apple shares have grown by 22,7% in a year. Over five years, the growth is 243%, and over the entire existence of the company — 176%.

It is important to maintain stability and replenish your portfolio every month. Only thanks to compound interest can you achieve significant returns in the long run. This instrument is highly liquid: shares can be sold at any time. In the long term, I consider this instrument to be one of the best in terms of returns. Among the popular brokers where you can buy shares or ETFs, I recommend Interactive Brokers .

Cryptocurrency

I have allocated 10% of my portfolio to cryptocurrency. This is a rather risky instrument, so you need to be careful. On the other hand, the cryptocurrency market is developing rapidly. We have already seen how the price of Bitcoin exceeded $100,000. Therefore, this instrument is also worth considering, allocating some of its funds to it. With a successful portfolio formation, cryptocurrency can bring even more income than stocks and ETFs.

When to sell assets? It’s important to set an investment goal. For example, for stocks and ETFs, my goal is to secure my retirement in the future. I plan that in 20 years my stock portfolio will generate a monthly income in the form of dividends or I will be able to sell some of the assets. Investing accelerates the achievement of the goal. For example, if you save for a car with a deposit, it may take five years, but with stocks or cryptocurrency — twice as fast.

Your own business is the best investment

I believe that having your own idea or business is the best investment, because a person is usually passionate about their business, knows it well, and has a chance of success.

Mostly, businesses generate profit and allow people to leave their main job, become masters of their own lives and become financially independent. Of course, for those with a stable income, for example, as IT specialists or top managers, the motivation to create their own business may be less. However, IT professionals can probably think about their own technology startup. There are examples of such projects taking off: Gitlab, Grammarly, Ajax, People.ai, Restream, MacPaw and others.

Personally, I try to save up to 50% of my income: 10% to help the Armed Forces of Ukraine, and the portfolio structure is 75% stocks, 20% crypto, and a 5% cash «cushion.» The average profit is 15-20% per annum for stocks. For crypto, it was up to 30-40%, but recently we have seen big fluctuations.

Another look at investing

One of the first steps should be to analyze your available funds and reserves to understand how much money you have, how much you earn, and how much you can allocate to investments without harming yourself. Investments should not be at the expense of health or other important needs. My personal goal for investing is to provide for myself in old age and my child’s education.

If a person has loans, then he should not invest immediately. First, you need to pay off debts. In basic books on financial literacy, the first point is to get rid of all loans, since this is almost always unprofitable. The exception is targeted loans, when you clearly understand what they will be used for.

You can often hear: «If I had invested in Bitcoin in 2011, I would be a millionaire now!» But living in the past is a bad idea. Similarly, in 20 years someone will say the same about today. Therefore, by diversifying your investments, you can expect that one of the directions will «shoot», like Bitcoin once did. The earlier you start investing, the better. Every year the market tends to grow, and every year you miss opportunities.

If you have never invested at all, it is worth starting with simpler and more understandable instruments, such as bonds. They are easier to issue, they operate within the framework of Ukrainian legislation. The investor will receive more money than if they were lying idle.

There is an interesting strategy in investing in stocks called DCA (Dollar-Cost Averaging). You consistently invest a certain amount ($100, $200, $500) in ETFs, simply buying them for a stable amount each month. Since the S&P 500 index grows on average from year to year, buying a certain amount every month will bring you a profit of about 10% annually. This strategy may seem too simple, but it is one of the most effective, according to calculations by various mathematical models.

We should not forget that we live in a country that is at war. Therefore, investments in the Armed Forces of Ukraine should be permanent, because any missile strike can leave a person without property or income. We need to support our army as much as possible, this will bring a positive result for both the investor and Ukraine.

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