Savings vs Investment: Saving is Not the Same as Investing9:32 PM
Knowing the difference between savings and investment economics and when to choose each, can help you reach your financial objectives. But ...
Knowing the difference between savings and investment economics and when to choose each, can help you reach your financial objectives. But you will see many similarities between saving and investing.
Savings: In short, When your primary concern is to secure money without losing any value is savings.
Invest: When you are investing, you are buying assets using cash, your main concern is to grow its value to increase your profit. It's business, its investment.
Do you want to know if you are using your money correctly? First, you must understand very well what is the difference between saving and investing.
Surely you have very clear that to save you can approach a banking institution and open a checking account where you can deposit your money and watch it grow. However, to know if you are making the right decision with your money we must understand very well what is the difference between saving and investing.
Suppose you have the possibility of reserving a portion of your monthly income, whether from your salary, your business profits or any other type of revenue, once you manage to pay your child's tuition, the household expenses as light, Water or any other considered. You have the opportunity to reserve a minimum amount, and save it, either in a bank account, under your mattress or in your piggy bank; In doing so, is saving, that is, it manages to preserve for a particular time an amount of money that will have a goal in the future.
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The intention of this savings can be: to face an emergency, to plan a vacation with your family or the purchase of a car, but while keeping this amount "saved" is keeping that money "idle."
Conversely, an investment allows savings to be "working." That is to say: through investment instruments, you can grow your capital to achieve your future goals faster. So that if your intention is to acquire a car and you want to get it only by saving, it will probably take the time to collect the amount Necessary to be able to buy it will be much greater than the time in which you could do it if you invest your money.
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In this sense, we can understand that saving is the amount that we separate from our income to be able to use it in the future, whereas investment means using current resources (including savings) to make a profit, called future performance.
Surely you have already heard that investments have risks, but what is risk-free today?
An example: keeping the money on your mattress is taking a risk, as an accident could happen in your home and lose it.
"When your primary concern is to secure money without losing any value is savings." TweetTherefore, to prevent contingencies, there are financial institutions, such as banks or brokerage firms, which have investment advisers that will allow you to decide which investment best fits the objectives according to the level of risk that you deem appropriate. This way, although the possibility of your house flooding and losing your mattress may be very remote, you could also find investments that are not so risky.
Saving or investing?The decision is sometimes not simple, because, on the one hand, you may think that investing is wasting money, but on the other, saving without a purpose would be to accumulate money in vain, as someone greedy that just together for no reason. To decide what to do with your money, it is important to be clear about the differences between these two things, and what each implies. That way you'll know what to do with your money.
"Saving or investing? Make the right choice without wasting money or losing value." TweetMaybe you think that you can not invest, your salary is low and you barely enough to live and save a small amount of money. But investing does not always involve large sums, there are personal loans in Uruguay where you decide how much money to invest and in what project exactly. We can all be investors, and increase our heritage if we make the right decisions.
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Investing is not so easyIn reality, the most difficult thing is to know where to spend, what is best for us, if we should put money into this or that project. It is still harder to predict the results of our investment, and in the end, it will turn out just as we thought. But if you have the right tools, it's not that difficult either, and it can make our assets grow considerably. Starting little, you can increase your wealth with minimal investment in personal loans in Uruguay.
Difference between saving and investingAlthough they resemble each other in the imaginary, saving and investing are not the same. Saving is saving money in anticipation of future expenses, or only to avoid spending more. So it takes some of the monthly income, and keep it to face future situations or eventualities. Investing, on the other hand, is putting some property somewhere, such as personal loans, to earn income or income over time (sometimes long or medium term). That is, do something so that the money you had saved before, grow or multiply in some way.
Better to decide what to do with your money, savings or invest?
The difference between savings and investmentsTo see more clearly the difference between saving and investing, we sometimes get confused because one step comes after another (we save to have money that we then invest) here are some key points.
- While when we save only we remove money from our income when investing, we use the money to make more money, that is to say, we work so that our wealth grows
- When you save, money is stored in easily accessible places, because we save to cover eventualities, and when they happen, we need to be able to access it. When we invest, the money is placed in instruments or projects such as personal loans in Uruguay, which give us an interest in the medium or long term.
- There is almost no risk of losing the savings, except for a deficit in the local economy. However, when investing we take risks, it is impossible to invest without risks because we depend on the project in which we have put the money.
- We do not use the same money to save that to invest. At least it is desirable that it be so. While the money saved will be used for emergencies or contingencies, it is not good to use that money to invest. It is not desirable to invest the money for emergencies, let alone the daily expenditure.
- We save and then spend the money on what we decide, whether the case of urgency, vacations, buying gifts or something we wanted. Conversely, investment money is not used for immediate things but is often used to reinvest it.
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Now that you have clear the difference between savings and investment, you can better decide what you want to do with your money.