Are you frustrated with the interest rate you get on your savings?
I bet your bank hasn’t increased your savings rate, despite putting up its borrowing rates as soon as it could.
If you are concerned about the size of your nest egg, or you want a fair rate of interest on your hard-earned money, then read on…
There is now a major new financial institution that offers very attractive interest rates that will help you build your nest egg rapidly.
The fact is that saving money in a traditional bank account will never enable you to build up a serious nest egg. In fact, given increasing rates of inflation, your money is actually worth less every year. Considerably less!
And, I don’t know about you, but, given the choice, I would not be giving my money to any of the big banks. I simply don’t trust them anymore. I can’t think of a single major bank that hasn’t been found guilty of some nefarious activity in the last few years.
So all said and done, I have always been keen to seek out alternatives.
Traditionally, you can choose to invest your money into stocks and shares or property, gold or (since 2008) peer to peer lending to get better returns than a savings account. It is generally true to say that the risks increase in line with the expected reward.
Cryptocurrencies and blockchain investments arrived on the scene in the last decade. You may not yet fully understand what they are or how they work, but, rest assured, they are not a fad. They are being integrated into every industry and are shaping our future in a big way.
And, as you will know, some people have made big profits from Bitcoin and other cryptocurrencies. But those successful crypto investors are in a very small minority who really know what they are doing.
The trouble is only about 5% of investors do know what they’re doing, and they make their money from the 95% who don’t.
So, it’s difficult to know what to do to earn a good return.
But there is now a new option available. I have been using it since last year and, I believe, it offers a very appealing combination of excellent interest rates and low levels of risk.
I’m talking about crypto savings accounts, which are now offered by a handful of fintech companies.
Now please don’t switch off at the mention of the word crypto and dismiss it as being too risky. The truth is you can take advantage of saving your money with these companies using fiat money (e.g. dollars euros or pounds) without ever needing to buy crypto-currency.
Of the available companies, Nexo, is the best well known. Launched in 2018, it is the world’s largest and most trusted lending institution in the digital finance industry.
Nexo empowers millions of people to benefit from the value behind crypto assets to shape a new and more equitable financial system. To give you an idea of its size, at the time of writing it was licensed and regulated to operate in over 200 countries and has over 3.5 million clients.
The Nexo Wallet lets you manage all your assets from a single wallet, while also benefiting from top-tier insurance to the tune of $375 million.
Nexo charges its users very small fees. It does not charge any type of account maintenance fee, and you’re free to withdraw your fiat money or cryptocurrency at any time without incurring charges.
You have 2 choices to invest with Nexo:
1. You can transfer money directly from your bank account and keep it pegged to the US Dollar Euro or Pound, so it will always be worth the same as your chosen currency. You can hold it in your Nexo wallet and earn up to 12% a year.
2. You can transfer your money to Nexo and then convert it to your chosen crypto currency. With the best known cryptocurrencies such as Bitcoin and Ethereum, you can earn up to 8% interest a year.
With some of the lesser-known coins you can earn up to 20% a year, occasionally even more. I’ve personally invested in one coin (AXIE) which pays me 36% a year.
You must be aware that if you transfer your fiat money into cryptocurrency, the value of that crypto coin could go up or down in value. So, if you are risk-averse, then it may be best if you just stick with option one, which, let’s face it, is a pretty great return compared with a traditional savings account.
How do Nexo pay such high rates?
The traditional banks use fraction reserve banking methods so they can typically lend 10 times the amount we deposit with them. That means for every £100 placed on deposit, assuming a lending rate of 7%, the banks can make £70 a year (100 x 10 x 7%). On credit cards, they may make £200 a year off your £100 deposit. They will pay you about 50p of that (if you’re lucky).
Do you really want to give your business to a company that treats you like that? I know I don’t.
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Like a traditional bank, Nexo’s core business model is to make money on the difference between the savings rates it pays and the rates it charges to lend money. But, the difference is, it offers a much fairer way of dividing the income derived from making the loans.
Is Nexo safe?
Nexo is a well-funded multibillion-dollar global company. It is not covered by the Financial Services Compensation Scheme, but it is a very substantial company, so, I believe, the risk of it going bust is extremely small.
It currently has $375 million worth of insurance to protect investor funds and is looking to increase that to $1 billion.
Reputation in the digital sphere is critical and Nexo’s reviews on Trustpilot and other consumer sites are excellent.
Nexo gives top priority to security and customer service. They comply strictly with KYC (Know Your Client) and AML (Anti Money Laundering) processes and have features such as segregated multi-signature cold wallets, two-factor authentication, biometric identification, login alerts and round the clock support.
It is impossible to foresee and eradicate every possible risk, but I believe my money is as safe there as it would be anywhere.
My top tips:
I’ve been investing in Nexo since last year, and these are my top tips
- Decide on the level of risk you’re comfortable with. Do you keep all your savings in fiat money? Or, do you put a portion of them into a crypto coin such as Bitcoin or Ethereum which are generally regarded as the gold and silver of the crypto world, so that you potentially earn a bigger return. Be aware that all crypto coins are volatile and you may also lose the money you invest in them if they go down in value.
- Think long term. These rates are so much better than anything available through the traditional banking system. You can take full advantage of them to build your nest egg by investing long term and reinvesting the interest you earn to take full advantage of the power of compound interest.
- If you are happy to keep your money tied up for one month or even three months, then you can take advantage of generous bonus interest rates.
- You can increase your interest rates by an extra 2% a year if you choose to have your interest paid in Nexo tokens. This will give you a little bit of exposure to the cryptocurrency world. Nexo tokens are a pretty strong cryptocurrency in their own right. There are $1,175,832,985 worth of Nexo tokens in circulation making Nexo the 85th largest crypto coin (out of thousands).
At the time I opened my Nexo wallet, the crypto market as a whole was at a very low point and Nexo was about 45% down from its high 6 months earlier. It is my belief that the Nexo coin will go up in value over the course of the next year so it made sense for me to take advantage of the extra 2%. You will need to decide whether you believe Nexo will increase or decrease in value when deciding whether to receive your interest in Nexo tokens.
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In a nutshell:
- World’s largest fintech lending institution offering interest rates many times that of major European and American banks
- Billion-dollar company
- Licensed to operate in 200 jurisdictions
- Over 3.5 Million clients
- Client monies are insured to $375 million (increasing shortly to 1 billion)
- Pays interest of up to 12% on ‘fiat’ money (Euros, Sterling and US dollars)
- Pays up to 8% on Bitcoin and Ethereum
- Easy to deposit and withdraw
- Instant access or fixed-term savings are available