Save or InvestBefore we embark on a journey towards financial independence, let us first understand the basics of savings and investments. A disciplined investor creates a balance between the two.Saving is the process of parking hard cash in extremely safe and liquid securities. The primary aim should be capital preservation and the secondary goal getting some returns, if possible. This can include savings accounts and certificate of deposits among others.
Investing is the process of using money/capital to generate a safe and acceptable return over a time-period. An investment can include real estate, gold coins, stocks, mutual funds and small business to name a few.
Differentiate between saving and investment
Saving
- Savings are ideally smaller, for short-term goals in the near future like a vacation, emergency etc.
- Liquidity is high, giving ready access to cash when needed.
- There is typically no risk involved.
- You can earn interest on your savings.
Investment
- Investments involve putting money to work to create wealth for achieving long-term goals like child’s education, house etc..
- Liquidity is usually not easy when you invest money.
- Risk involved is usually high.
- Investments have a potential to yield higher returns, where investments appreciate over time.
How much should one save and invest?
Savings is the foundation to build your financial goals. Savings will provide you the capital to design your investments. The two basics that ideally need to be followed are:
- As a thumb rule, your savings should be enough to cover personal expenses like loan payments, insurance, utility bills etc. and any unforeseen expenses.
- Any specific purpose that will require a large corpus of fund in five – ten years should be investment driven. For eg. purchasing a home after say five years will require a steady investment objective today.
Define your goals
- While saving, your primary goal is to secure your money without losing any of its value. Though saving money preserves its nominal value, it’s opportunities to grow are limited.
- While investing, you give your assets the potential to grow over a time-period. Typically, you re-invest your interest, dividends and other capital gains. More often than not you are willing to take risks while investing your money. But with the appreciation in money, also comes the risk of losing money. Hence, keeping a long timeframe is usually recommended to recover from any decrease in value.
Explore options
Here are the potential choices to be considered for savings:
- Savings accounts
- Money market accounts
- Certificate of deposits (CDs)
- bonds
- There are a host of investment options as well:
- Individual Securities such as stocks and bonds
- Pooled investments such as mutual funds
- Real Estate
- Gold
How to make financial planning work for you
Goal | Situation | Save(Or)Invest |
Buy a car | You intend to buy a new car within a year. | Save |
Down payment for a house | You would like to move into your new home in another 3-5 years | Save |
Child’s higher education | Your toddler just started pre-school. Probably at least 15 years later you will need a lump sum amount | Invest |
Have a comfortable retirement | You have just turned 30, you plan to retire at 60. 30 years of prudent saving will take you through | Invest |
Monica Brandson
Eu ut id pariatur laboris culpa. Aliqua esse magna labore mollit eu magna aliquip labore. Cillum occaecat esse duis laboris deserunt enim occaecat magna.
Jason Hartzo
I wanted to thank you for this fantastic read!! I certainly enjoyed every little bit of it. Ive got you bookmarked to check out new stuff you postÖ
https://empress-escort.com/escort-girls-beer-sheva/
שירותי ליווי
The very next time I read a blog, Hopefully it does not disappoint me just as much as this particular one. I mean, I know it was my choice to read, however I genuinely thought you would probably have something interesting to talk about. All I hear is a bunch of whining about something you could fix if you werent too busy looking for attention.
Imogen
I absolutely love your blog and find nearly all of your post’s
to be exactly I’m looking for. Does one offer guest writers to write content for you personally?
I wouldn’t mind composing a post or elaborating on a number
of the subjects you write in relation to here. Again, awesome site!
https://callescort.co.il
Hi there Dear, are you really visiting this website on a regular basis, if so then you will
absolutely take pleasant knowledge.
empress-escort.com
I’ve been surfing online more than three hours today,
yet I never found any interesting article like yours. It’s pretty worth enough for me.
In my view, if all website owners and bloggers
made good content as you did, the web will be much more useful than ever before.
Samual
Hello, i think that i saw you visited my blog thus i came to “return the favor”.I’m trying to find things to improve my website!I suppose its ok to use some of your ideas!!
israelnightclub.co.il
I’m now not certain the place you’re getting your information, but good topic.
I needs to spend a while learning much more or working out more.
Thank you for magnificent information I used to be in search of this info for my mission.
Hulda
I have been surfing online greater than 3 hours these days, yet I by no means found any attention-grabbing
article like yours. It is pretty value enough for me.
In my view, if all site owners and bloggers made good content as you probably did, the web shall be
a lot more useful than ever before.
website
Very interesting points you have remarked, regards for putting up.Raise your business
zoritoler imol
It’s a shame you don’t have a donate button! I’d most certainly donate to this fantastic blog! I guess for now i’ll settle for bookmarking and adding your RSS feed to my Google account. I look forward to fresh updates and will share this website with my Facebook group. Talk soon!
Watch sports online free
Simply want to say your article is as surprising. The clearness in your post is just spectacular and i can assume you’re an expert on this subject. Fine with your permission allow me to grab your feed to keep up to date with forthcoming post. Thanks a million and please keep up the gratifying work.
NHL live streams HD
I truly wanted to develop a small note to say thanks to you for all of the amazing guides you are giving here. My extensive internet search has at the end of the day been rewarded with sensible facts to write about with my close friends. I would claim that many of us visitors actually are undeniably fortunate to be in a perfect site with many brilliant people with great basics. I feel quite privileged to have seen your entire website and look forward to tons of more fun times reading here. Thanks a lot again for everything.
MMA streaming site
I’m not sure exactly why but this website is loading very slow for me. Is anyone else having this problem or is it a issue on my end? I’ll check back later on and see if the problem still exists.
1xbet resmi sitesi
I will right away seize your rss feed as I can not in finding your email subscription link or e-newsletter service. Do you have any? Please allow me recognize in order that I could subscribe. Thanks.