28 Oct 2024
Are you concerned about your future? As an overseas Sri Lankan, you might face a crucial decision when managing your finances: should you prioritize savings or investments? Sri Lankan expats are spread all over the world. Romania has over 15 thousand individuals, forming the second-largest non-EU expatriate community. This massive number highlights the country's heavy reliance on remittances as expats send money to Sri Lanka from Romania regularly.
In fact, in 2023, personal remittances in Sri Lanka reached approximately six billion U.S. dollars. So, what option will benefit you in the long run? While living in Romania, striking a balance between saving for emergencies and investing for growth is the key. Keep reading to devise a tailored financial strategy that caters to your needs and safeguards your loved ones from potential financial strains back home. This way, you will be able to navigate the challenges of managing your wealth effectively.
For the Sri Lankan diaspora, savings and investments offer financial security and growth. And both methods can significantly boost income potential. Let's explore each option and weigh their advantages and downsides to help determine the best approach for maximising your financial stability.
For the Sri Lankan diaspora, saving is vital for financial security across borders. And in Romania, the gross saving rate in 2024 is 16.9%, which reflects a strong savings culture. So, whether it's for emergencies, short-term goals, or long-term aspirations, dependable savings accounts with attractive interest rates can help preserve and grow wealth over time. This disciplined approach not only boosts financial resilience but also empowers individuals to confidently pursue their dreams. Let’s look at the pros and cons of saving as an expat in Romania.
Investing involves allocating funds to assets like stocks, bonds, real estate, and mutual funds to generate returns in the future. While it may sound riskier but it is potentially a more rewarding approach.
By diversifying investments, you can outpace inflation, build wealth, and get passive income through dividends and interests. With strategic planning, investments can secure financial goals such as retirement or property acquisition and ensure long-term stability and independence.
When it comes to savings, you have the authority to choose the way that you prefer your needs. You can either go for opening a savings account or save it in your own residence. In any case, you need a strategy to actually execute the plan. Here’s how you can ensure maximum savings and compliance.
As a Sri Lankan expat, consider establishing a SMART (Specific, Measurable, Achievable, Relevant, Time-bound) financial goal. Whether it's managing household expenses, dining out, indulgences, or making a money transfer from Romania to Sri Lanka, clear financial goals keep you motivated and on track. And by breaking long-term objectives into manageable steps, you can monitor progress effectively.
Alongside setting goals, consider strategies to boost your income. Seek growth opportunities at work, acquire new skills, start a side hustle, or invest in further education. Augmenting your income not only provides more resources for saving and investing but also accelerates your financial progression.
Planning for unexpected events like job loss or medical emergencies is vital to consider for any expat. So, thoroughly understand your financial details by categorizing expenses, identifying savings opportunities, and crafting a budget that accommodates both saving and investing.
Then, establish an emergency fund with three to six months' worth of living expenses set aside in a separate account for easy access. This fund not only provides security but also safeguards your financial goals.
As an expatriate in Romania, regularly sending money back to your family can be burdensome. You can consider investing in your home country, such as purchasing property or starting a business for your loved ones. This approach can lessen the need for frequent transfers and provide long-term financial support for your family's needs.
As an expat, you have a range of investment opportunities available to build wealth and reach your financial objectives. However, you need to evaluate each option in detail to mitigate the potential risks. Now, let’s look at what Romania offers in terms of investment avenues:
You can consider investing in the Romanian stock market to own shares in publicly traded companies. The BET index, Romania's primary stock market indicator, has shown growth, increasing by 13.59% in 2024.
Romania government bonds, like the 10-Year Bond, offer a lower-risk investment with a steady annual yield of 6.65%. These types of investments are ideal for conservative investors as these bonds provide a safe and reliable income stream.
You can also diversify your investment portfolio by venturing into real estate in Romania. Property investments offer capital appreciation potential with a 2% growth rate. And rental income provides a stable cash flow which makes real estate an attractive long-term investment option.
You can also engage with professionally managed mutual funds to access a diverse pool of investment opportunities. The mutual fund industry in Romania saw a 3.9% increase in March, with a year-to-date advance of 8%. This rise showed growth potential and professional management expertise for Sri Lankan expats.
While both savings and investments offer unique benefits, finding the right equilibrium is crucial based on your individual needs. You can consider the following optimal approach to keep both in balance:
Prioritise creating a safety net to cover unexpected expenses or emergencies. Ideally, it is better to aim to save enough to sustain your living expenses for three to six months. This method provides a buffer during challenging times and lets you make an online money transfer from Romania to Sri Lanka.
If you have high-interest debts, such as credit card balances or personal loans, focus on paying them off before investing. This eliminates debt, reduces financial stress and sets the stage for future investment endeavours.
Define specific financial goals, such as saving for education, property purchase, or retirement. Determine each goal's timeline, risk tolerance, and expected returns to tailor your investment strategy.
Consulting with a financial advisor specializing in assisting Sri Lankan expats can offer valuable insights and personalized recommendations. They can provide guidance on investment opportunities aligned with your goals and risk profile and ensure informed decision-making.
Balancing savings and investments is key to financial security and growth, especially for Sri Lankan expats in Romania. And tailoring a strategy to your financial objectives, risk tolerance, and time horizon is all you need. Savings serve for emergencies and short-term needs, while investments are crucial for long-term wealth creation. But don't let financial uncertainties deter you.
Start by making informed decisions regarding an online money transfer from Romania to Sri Lanka with ACE Money Transfer. ACE offers competitive rates, minimal fees, swift transfers, and advanced security, ensuring a worry-free remittance experience. And with ACE handling your remittances, you can focus on building wealth prudently. So, attain your financial freedom and start this journey without hesitation!
The ideal balance between savings and investments depends on individual financial goals and risk tolerance. However, a general rule of thumb is to focus on building an emergency fund to cover unexpected expenses and then move towards making regular investments for long-term wealth creation.
Sri Lankan expats in Romania can send money to Sri Lanka securely and conveniently by using a trusted money transfer service provider like ACE Money Transfer. ACE is a reliable platform offering competitive exchange rates, minimal fees, swift transfers, and advanced security measures, ensuring a hassle-free remittance experience.
Sri Lankan expats in Romania have a range of investment opportunities available, including the stock market, government bonds, real estate, and mutual funds. Each investment avenue offers different levels of risk and potential returns, and it’s essential to evaluate these options based on individual financial objectives and risk tolerance.
Maintaining both savings and investments offers a balanced approach to financial security and growth. Savings provide stability and liquidity for emergencies and short-term needs, while investments offer the potential for long-term wealth creation and financial growth through capital appreciation and passive income.
Sri Lankan expats can ensure maximum savings in Romania by setting realistic financial goals, increasing their income through various opportunities, budgeting effectively, and building an emergency fund.
