Investing Vs. Saving: Which Should You Do, When, And How? - Money Under 30

Investing and saving although have few similarities, yet they are two different things entirely. One is not better than the other in the actual sense. It all depends on your financial position and your financial goal. One major difference I find amusing between saving and investment is, while investment involves a high return on investment with the risk of experiencing loss, savings does not come with such risk and often yield a low return on investment. As a rule, if you would not need particular money for a very long time and you can stand the unsteadiness in the financial market, then you can choose to invest your money. There is numerous list of companies to invest in, but one must carefully study the financial state of any of companies and other factors before investing. To be on the safer side, one can get a financial advisor.

 

Investment has a higher return on investment than savings

There are different ways one can invest his or her money. Some invest by buying shares from companies, while others invest in the stock market. Regardless of your investment options, an investor tends to get a high return on investment as time goes. Comparing it to savings, which usually comes with very low bank rates, which may not be tangible due to a lot of factors in the long run. Because investment comes with a risk of depreciating, it is advised one seek advisory services from a financial analyst. You can check out options for income reviews before you seek the service of any financial analyst.

Have a purpose for saving

Saving would only make sense if there is a goal behind it. It can sometimes be unwise to save blindly without having any purpose behind it. Saving with purpose will help you to guide your saving and help you stay committed to it. For instance, if you are saving for your child’s college, you wouldn’t want to relent or give in to pressure to tamper with the savings, because of its consequences. Such will not be the case when you’re saving blindly.

 

Inflation harms long term saving

Saving your money in the bank for long period of time is not advisable, as a result of the effect of inflation. The value of most commodities tends to increase over time, making commodities bought years back more expensive presently. Since saving money in the bank doesn’t yield a high return on investment, inflation will ultimately affect the value of the money saved for a very long time. Even the interest rate that comes with saving often does not affect in the long run, due to inflation.

 

Save for emergency

Since we can’t easily predict any occurrences or challenges that might affect us financially, it is best to cultivate the habit of saving. With saving, you can easily get access to your money and use it for any emergency financial demand. This has prevented a lot of people from going into debt and helped them in their financial crisis.