A lot of people aren’t aware that Saving on-hand cash and investing Money are completely different concepts.
While saving and investing can be both correlated to generating your wealth and your on-hand cash, these two actually have their respective roles and purposes in your financial strategy.
And if your question is whether you should invest or save, then just know that it depends on your current financial goals as well as your financial situation.
If this sounds complex yet interesting to you, you may want to take some time to browse the next pages.
In this article, you’ll find out what saving is, what investing is, and other related key points fall between the two contexts.
Thus, read further and find out for yourself to start producing your assets.
The difference between saving and investing
● Saving
Savingmoney refers to the act of setting money aside little by little or may also refer to an earned income that hasn’t been spent.
It is more like preserving your cash for a greater purpose or reason.
It is commonly done to save up money to pay for something particular such as the monthly home rental, bills, or for the risks of unfortunate circumstances.
Different methods of saving:
Saving money can be done in various ways. Thus, the list below shows some of the most common methods of saving which are done by the majority.
● Avoid acquiring unreasonable debts
● If you have current debts or loans, settle everything first to effectively monitor your expenses
● Setting money aside by depositing into an account
● Depositing money into a pension account
● Depositing money into an investment fund
● Saving up for any type of insurance like health, life, business, and so on which can be more effective with the help of an insurance adviser
● Setting money aside as cash or in a traditional way
Tips on how to save money effectively:
Saving money isn’t an easy task since countless temptations are gathered everywhere.
Thus, if you also find it hard to save money, worry no more because you may use the following tips below in order to keep up with saving money effectively.
● Create a weekly or monthly budget planner for you to be aware of your spending behaviour.
● Know where your money goes so you could efficiently determine where you could start cutting cost.
● Determine your financial priorities like monthly bills, rentals, food expenses, and more.
● Set your financial goals to help you stay motivated on saving more and more
● Investing
Unlike in saving your money, investing is an act of taking a portion of your on-hand or earned cash.
When you say investing, you’re growing your money through purchasing things and/or properties that will soon increase in value.
You can invest by buying stocks, purchasing a property, or acquiring shares in a fund.
Recommended Read: How to make more money on social media. Here are the hacks.
When is the perfect time to invest?
The perfect time to invest is as early as you start earning money.
But just know that you can start investing as soon as you develop your goals - particularly if they’re short, or medium, or long-term goals.
● Short-term goals - these are the goals you plan to do in the next five years.
● Medium-term goals - these are the goals you plan to do in the next 5-10 years.
● Long-term goals - these are the type of goals you plan to do where money won’t be an issue within 10 years or more.
The common advantages/s of saving and investing
While saving and investing money are deemed to be a completely different idea, the two have also some other things in common.
Aside from a productive way to preserve and generate your assets-in-cash, the list below summarises the other factors that these two concepts have in common.
● You’ll have backup money for possible emergencies that may take place in the future
● Aside from having backup cash for the risks of emergencies or any other unfortunate circumstances, you’ll also have a preserved cash for future special events such as the wedding, starting a family, car purchase, home rental or purchase, and more.
● The saved or invested money can be used as a capital for your dream business or post-retirement savings, and more.
● Saving or investing will boost your financial awareness as well as your discipline in handling your assets-in-cash.
Now that you’ve read the following factors concerning saving and/or investing, you can now thrive to generate your wealth or your assets.
And if you have more helpful tips and ideas regarding the discussed topic, feel free to knock on our doors to share your knowledge and/or thoughts.
AUTHOR BIO:
Kath Ramirez embraced the dream of being a writer since she was in 4thgrade. She took it seriously and she now writes for Insurance Adviser New Zealand, one of the top financial and insurance companies in NZ. Kath also keeps herself busy spending time with her family, cherishing the role of a mom to 3 dogs and a puppy, reading random books, and diving into the world of photography. She’s not even a pro to whatever she’s engaged into right now, but one thing she knows, she’s happy and that’s more than enough.
