Savings mistake that could cost more than $2k

Australians are being urged to consider what they’re doing with their savings as inflation continues to savage their purchasing power.

Calculations from fixed income investment app Blossom have found that the average Australian could lose $212 per month or $2553 over the next year if they don’t have proper plans in place to make the most out of their money.

That figure comes from the average Aussie having $34,507 tucked away in their savings account, with Blossom co-founder Gaby Rosenberg urging individuals to prevent their money from being eroded by inflation.

“We’re in a super difficult economic environment,” she said. “Wages aren’t rising as fast as inflation, inflation is the highest it’s been since the 80s, the RBA is hiking interest rates, mortgages are rising and that’s being passed off to renters.

“We’re in an economic storm and it’s caused Australians to really start feeling the pinch of the cost of living crisis, and it’s putting people in really precarious situations.”

Over the past 12 months, inflation has risen to 7.0 per cent, according to the Australian Bureau of Statistics.

Ms Rosenberg has outlined the three options for people in terms of what to do with their money: keep it in a savings account, invest in shares or put their money toward fixed income.

Fixed income investments include assets such as government or corporate bonds, and provide a return in regular payments over a fixed time period.

The returns for this type of investment are generally paid out twice a year, however, Blossom pays out its investors every day.

This type of investing is seen as less risky than investing in the share market, but generally requires thousands of dollars up front to get involved in.

That’s why Ms Rosenberg cofounded Blossom, an app that allows everyday people to participate in fixed income investing with as little as $1.

“The pre-existing fixed income options were really hard for everyday people, me, my friends, my colleagues, to access and so I wanted to try and provide that access,” she said.

“Some of the barriers to entry were minimum account balances of between $50,000 and $250,000 which for me was impossible.”