SAVINGS VS INVESTMENT: 3 things you should know
What is savings?
Savings refers to income not spent. It represents a net surplus of funds for an individual or household after paid expenses and obligations. People may save for various life goals or aspirations such as vacations, retirement, buying a home, car, etc. Savings are kept in cash or cash equivalents, which are not exposed to the risk of loss. However, savings can be grown through investment.
What is Investment?
Investment means allocating money with the expectation of a positive benefit in the future. It means owning an asset to generate income from the appreciation of your investment, which increases the value of your asset over some time.
Investment or savings: which is better?
Saving and investing are both important concepts for building a sound financial foundation, but they’re not the same thing.
Saving is definitely safer than investing, but Investing is better than saving. Saving will not result in accumulated wealth. When you are saving money, you can easily pull it out when you need it. Whereas when you are investing, you have the potential for long-term gains and losses. The primary difference between Savings and Investment is just the Profit margin and risk factor. So basically, Saving is safer but less profitable, and investment is risky but very profitable.
Savings = Zero Risk investments + Low-profit margin.
Investing = High Risk + High-Profit margin.
Having adequate savings is essential, but so is long-term financial security. Once savings thresholds have been reached, individuals should immediately begin investing. Savings alone may not cover the cost of a long retirement. Investments, while riskier than savings, have more growth potential.
Should I save first or invest first?
Before thinking of saving or investing, you must have a goal you want to achieve. Deciding whether to save or invest for a particular goal can be difficult, but it all depends on your goals.
Goals can be short term or long term
- Short-term goals: A short-term goal is something you want to do in the near future. The near future can mean today, this week, this month, or even this year. A short-term goal is something you want to accomplish soon. If you have a short-term goal, then save. With saving, there is no risk of your balance decreasing and your money will be readily available when you need it.
- Long-term goals: A long-term goal is a goal you want to accomplish in the future. If your goal is a long-term goal, then invest. Investing provides an opportunity to get greater returns if you have a long time horizon and can delay your goal if things don’t go as planned. If investments are down at the time when you originally planned to reach your goal, delaying by some years could result in your investments returning back to a higher value.
Differences between Savings and Investment
| BASIS OF COMPARISON | SAVINGS | INVESTMENT |
| Meaning | Savings represents that part of a person’s income that wasn’t used for consumption. | Investments refer to the process of investing funds in capital assets, intending to generate returns. |
| Purpose | The purpose of savings is to fulfill short-term goals or urgent requirements. | The purpose of investment is to fulfill long-term goals: To provide returns and help in capital formation. |
| Returns | Low returns | High returns |
| Risk | Very low or negligible risk | High or medium risk |
| Liquidity | High liquidity | Low liquidity |
Savings refers to income not spent. It represents a net surplus of funds for an individual or household after paid expenses and obligations. People may save for various life goals or aspirations such as vacations, retirement, buying a home, car, etc. Savings are kept in cash or cash equivalents, which are not exposed to the risk of loss. However, savings can be grown through investment.
Investment means to allocate money with the expectation of a positive benefit in the future. It means owning an asset to generate income from the appreciation of your investment which is an increase in the value of your asset over a period of time.
Investment or savings: which is better?
Saving and investing are both important concepts for building a sound financial foundation, but they’re not the same thing.
Saving is definitely safer than investing, but Investing is better than saving. Saving will not result in accumulated wealth. When you are saving money, you can easily pull it out when you need it. Whereas when you are investing, you have the potential for long-term gains and losses. The basic difference between Savings and Investment is just the Profit margin and risk factor. So basically, Saving is safer but less profitable, and investment is risky but very profitable.
Savings = Zero Risk investments + Low-profit margin.
Investing = High Risk + High-Profit margin.
Having adequate savings is essential, but so is long-term financial security. Once savings thresholds have been reached, individuals should immediately begin investing. Savings alone may not cover the cost of a long retirement. Investments, while riskier than savings, have more growth potential.
28 Comments
coursework info coursework template coursework mark data analysis coursework
coursework phd coursework writing service coursework define coursework at college
coursework umich stats quantitative coursework coursework writing service coursework helper
coursework jelent貥 coursework vs thesis coursework subjects coursework based degrees
coursework vs research masters creative writing coursework coursework upm coursework jamii forum
coursework vs exams help with coursework coursework meaning coursework ucl
custom coursework writing service coursework meaning in english coursework
helper coursework history
courseworks help
[url=”https://brainycoursework.com”]coursework writing help[/url]
coursework marking
coursework knowledge definition design technology coursework coursework advantages and disadvantages knewton coursework
creative writing coursework ideas design and technology gcse coursework
do my coursework online creative writing coursework ideas
coursework student coursework writing coursework at a college
or university coursework english literature
topchatsites free meet me site christian dating for free websites online
free dating sites for single men and women date online mature adult phone chat faroedating chat
100% inspektion absolutely free online dating sites
local free dating sites english dating sites
adult meeting site plenty of fish dating site of free dating free chat
and dating online datingfree
plenty of fish dating site of free dating free and single dating sites really free free date web sites
european singles dating sites senior dating sites free local singles mature free and single
match dating dating services international dating best free dating sites
best free dating site free dating sites for single men and women free online dating service personals for free
totally free dating site free chat cam mature mistresses plenty of fish
login all dating sites in usa
best writing services custom english essays essay editing services help writing an essay for college
admission college essay help writing essays services college application essay
help online buy essays online cheap
essay conclusion help help with essay writing buy argumentative
essay customer service essays
mba admission essay writing service professional essay writing help cheapest custom
essays i need help writing my essay
help with writing college application essay what are good essay
writing services top essay writing service essays writing services
i need help to write an essay write my essay for me help
me with my essay best essay writing service online
%random_anchor_text% %random_anchor_text% %random_anchor_text% .
prochlorperazine price prochlorperazine uk prochlorperazine pills