Should you Save or Invest?

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It is absolutely important for every financially keen person to save and invest. The two are crucial in meeting expenses but it is good to understand the major variation between them. Financial experts such as bankers and economists advise that the culture of saving has to be learnt at an early age.

Essentially, that in a small way teaches the value of money and assists in greater understanding of macroeconomics at a later stage. Saving money and putting money into an investment appears related but are completely different concepts. Once you have paid off your monthly or annual bills and expenses, you can refer to the remaining amount of money as the savings.

Additionally, it can essentially be a certain percentage of your income. However, we all recognize the fact that it is recommendable to set aside an amount of money that you want to save before moving on to spending.

Generally, people will use savings in case of unexpected expenditure such as home repairs, medical fees, educational expenses, unexpected accident etc. It can be a predetermined proportion of total earnings such as 10-20 percent. Therefore, savings is hard cash, set aside from expenditure by being restrained or avoiding an expenditure altogether.

When it comes to investing, there is a lot more. It is a certain amount of money that one sets aside in a financial system or product with the objective to get returns. Basically, there are three prime factors that bring a clear distinction between investments and savings.

Time

Investments take more time to generate income which could be months or even years. On the other hand, saving cater to short term needs.

Risk and reward

Savings have an almost negligible risk factor. However, they see less return compared to investments. When you invest wisely, it is possible to pocket manifold returns overtime.

Liquidity

Savings and investments differ in liquidity. While the former is among the assets with the highest liquidity thus accessible at all times, the latter could take time before attaining liquid status.  Therefore, you cannot expect to liquidate your investments on the spot.

The ease of accessing savings is a downside because it leads to the tendency of taking money whenever need arises. When that long-time friend of yours is having a celebration dinner, you rush to cash out your reserves. A graduation party, sudden trip, automobile repairs all these keeps popping and you find yourself dipping fingers on the saved funds.

The most ideal way of curbing the menace is to find a great investment such as fnfcom investment plan and lock your money up as you wait to get your returns. Additionally, as you consider investing, seek to increase your income and reduce expenditures too as those are the two essential strategies of boosting your reserves.

 

 

 

 

 

 

 

 

Fred Kabiru

Fred Kabiru is a content creator and SEO specialist. He is passionate and experienced about Business, Digital Marketing, News and Technology. He is a believer of content worth reading for a brand worth following.

 

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