“An investment in knowledge pays the best interest.” — Benjamin Franklin
When it comes to investing, nothing will pay off more than educating yourself. Do the necessary research and analysis before making any investment decisions.
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Savings: Money saving is what we put money aside gradually, typically into a bank account/ or any private firm. People generally save for a particular goal, like paying for a car, a down payment on a house, or any emergencies that might come up. Saving can also mean putting your money into products such as a bank recurring deposit accounts. Savings will be secure or minimal risk, and always be ready to liquidity in cash at the time of need.
Investments:On the other other hand financial Investments are made aiming to grow financially with time by building assets that might increase in value, such as stocks, Bonds, shares in mutual funds or real estate.
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Inflation and other financial variables can potentially effect your savings amount value negatively with respect to time. However, a good investments will increase the value in proportion of time.
Investment is an art that formulates with some level of industry knowledge, courage to take calculative risk and time.
Should you start investment now or wait?
Now, when you already know the differences between two, the question arises, when to start investing, or if you should focus on savings? The answer depends on your financial goals, risk tolerance and financial situation.
You should consider to implement your investment strategy after you have:
1: Build your emergency FundsBefore you invest make sure you have saved enough money that can help you to recover from any urgent financial situation.
Of course Savings comes first.
2: Paid-off the high interest debtsBy paying off high interest debt in full, you can save lot of money that might be counted as debt interest and you will reduce the total amount you owe faster. Since you are debt free your money is now free to put toward savings or investments.
3: Risk Tolerance:The fact that investment without an education and research will ultimately lead to regrettable investment decisions. Investment does not guarantee a good return, at times possibility to loose some as well.
You are an investor, not someone who can predict the future. Base your decisions on real facts and analysis rather than risky, speculative forecasts. Invest in an industry you’ve researched thoroughly.
Keep an eye on your investments. Be prepared to see your investment sink lower before it turns around and starts to pay off. Take that calculative risk on investments for better returns.
“The biggest risk of all is not taking one.” — Mellody Hobson
4: Potential Returns:Investments typically have the potential for higher return than a savings account.
The world of investing can be cold and hard. Be wise research well before you make any investment decision.