Global (عربي)
KSA (عربي)
Global (عربي)
It’s never been easier to invest. The explosion of micro-investing apps, crowdfunding platforms and even fractional ownership of real estate means that it only takes relatively small sums of money to access an exciting array of opportunities, many which boast potentially market-beating returns.
And therein lies the dilemma we now face in 2025: with such a dizzying number of choices, how should you divvy up your savings? How much of your money should you spread across investments or stow away at the bank for a rainy day? In this post, we’ll break down how to think about your options.
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The classic rule of thumb is to keep three to six months of living expenses in an account you can access right away.
This is meant purely for emergencies – your leaky car, that unexpected procedure, the great unknown. It’s best not to think about what can go wrong (focus on the positive!), but having some cash available for when it does can be a life saver.
For Islamic investors, this means putting your money in something like an Islamic savings account that operates on a profit-sharing (mudarabah) model.
You can compare the rates of different banks to get something competitive, and then deposit a bit of salary each month there – think of it as an investment in your peace of mind.
Read more: Islamic Saving Accounts (ISAs)
It may seem counterintuitive, but it’s often not a good strategy to save too much of your money.
That’s because all money comes with a so-called opportunity cost, which simply means how much you could be earning if you were to put your money somewhere else, with higher returns.
It’s especially important to keep your eye on the inflation rate. If the rate of inflation is higher than your rate of return, you’re actually losing money.
At the moment, most economists expect inflation to rise over the next year. That’s partly because of the Trump administration’s tariff policies, which will push up prices on all sorts of goods.
But inflation is very much a local phenomenon, so check your home country’s rates and use it as a gauge for how competitive the returns are on your savings or investments.
Historically, equities have outperformed the typical savings rate or rate of return on your bank account. The standard benchmark for this is the S&P 500, which tracks the U.S. stock market's largest 500 companies.
The index has delivered a return of over 10 percent since 1957. And 2023 and 2024 were particularly banner years, with returns clocking in at around 25 percent each time.
But that was quite above the norm. In 2025, analysts expect much lower gains, especially as new tariffs may eat into corporate earnings, a prospect that led to sell offs earlier this year.
Drilling a bit further down, analysts see strong growth in the technology sector, particularly companies that will benefit from the outpouring of investment in AI and cloud computing. But always do your homework (and avoid chasing meme stocks, which tend to be driven by hype rather than sound fundamentals).
If you have the stomach for some volatility but don’t want to pick individual stocks, you can invest in an index fund or ETF that tracks the S&P 500, like the SPDR S&P 500 ETF. You can also invest in ETFs that track larger sectors or promising trends, like ETFs in AI and robotics.
Read more: Funds, Mutual Funds and ETFs, What Are The Differences?
But exactly how much of your savings should you really invest in stocks? Afterall, they can be a risky move (as the sudden dip on tariff policies exemplifies). The long-term gains mentioned above can mask the fact that in any year, there may be a crash.
Another classic rule of thumb for investment is the “100 Minus Age” rule. In other words, subtract your current age from 100, and that’s the percentage of your savings you should allocate to equities.
If you’re 40 years old, you invest 60 percent in stocks, the other 40 percent in safer assets, like bonds or sukuk.
The rationale is simple: younger investors can take bigger risks to grow their cash. Older investors should ensure they have money set aside for when they earn less in retirement.
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These days, small investors also have unusually good access to interesting opportunities that were historically the domain of venture capital and large investors.
With any number of crowdfunding platforms you can invest in small companies across different sectors and geographies, a fun way to diversify.
Unlike with stocks, debt crowdfunding offers predictable returns. The company you lend to agrees to a fixed repayment schedule.
Many also offer auto invest features. That means you can drop a bit of savings each month into your crowdfunding account and have it automatically allocated to different investments, based on your risk appetite.
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Disclamer:
This post is for educational purposes only, and does not constitute investment advice or a solicitation to take any financial action. It should not be relied upon when making investment or financing decisions.
