Have you ever heard the words ‘saving’ and ‘investments’? Of course, everybody must have heard what saving and investment are. Both are totally related to the money you earn and how you use it. Potatoes and sweet potatoes are both vegetables, but they aren’t identical veggies, they are far from the same. Similarly goes with saving and investment. They both are related to your income but they help you in different ways.
So now let me tell you the difference between saving and investment and how they help you gain more wealth.
What Is Saving?
Basically, savings means the income you earn after doing your job and not spending some amount of your income in the present day and keeping it for future use is saving. Saving your money helps you in handling unexpected circumstances such as health issues, paying fees, emergency trips, and many other factors. Savings could help you in fulfilling your dreams such as if you want to buy your favorite bike or any mobile phone.
Some Benefits Of Saving
Helps In Emergencies: There will be many situations that are unexpected, so when that occurs you cannot use the money which you kept as your monthly or weekly budget. There will be a lot of pressure because you cannot use your monthly fund and you need to bring in some extra funds in a very short period. The situation could be like life or death. So the money you save can help you in many ways.
Pay Your Liabilities: Saving some amount of money for the future so that it helps you in paying your bills on time such as water bills, electricity bills, or any such expenses. Your saved money can help you avoid your credit card bills which means if you save money you could buy things you want rather than using your credit cards and paying a bill at the end of the month.
Retirement Help: There are long-term benefits of saving. One of them is saving your money for retirement. If you start saving your money in a proper manner you don’t need to be dependent on someone once you leave your job behind. So try and save as much as you can so that you can live your retirement life comfortably.
Financial Freedom: Saving some amount of money every month so that in the end, you will have enough money that you want to spend on something you like. Saving money gives one peace of mind and helps them to enjoy financial freedom. And it even gives you relief knowing that you have enough saved for any emergency circumstances.
Finance A Trip: Everyone dreams to have a trip with their loved one once a year. But that could only be possible if you have the required funds to carry out your trip. Having accumulated funds can help you in making your dream into reality, you can be happy, feel relaxed and make your bond even better on this vacation.
Further Education: Nowadays fees are the major expense. So if you have saved enough for your child’s education then that would help your child to quickly progress in his/her career without any hurdles. Even saving money can help you in getting the degree you want or getting some extra education.
What Is Investment?
Investment is an asset or item with the goal of generating appreciated income. Appreciation means an increase in the value of money over time. When an individual buys a good and does not consume it but keeps it as investments for further gains, for example, gold, buying of market securities, stocks, mutual funds, etc. basically it is an effective way to put your money somewhere and likely build your wealth. Investing your money not only helps you to get a profit but also helps you become independent and use your money if any crucial event or financial circumstances arise.
Benefits Of Investment
There are so many benefits of investment and they are as follows
- Tackle Inflation: If you don’t get into the habit of investing your money and growing it. Then you will end up losing it over some time due to inflation. Basically, inflation means a general increase in prices which unfortunately decreases the consumer’s purchasing power, and this inflation happens every year. Almost average inflation is around 3%. So if you invest your money and say you would at least earn around 7% on average then you will stay ahead of inflation whenever it happens.
- Helps In Building Wealth: Investing is how you build the money which you earned by working so hard. So if you invest your money now you can use it in the future when some emergency occurs.
- Retirement: As I said before, saving your money could help you in getting the life you want. Similarly, investing that saved money somewhere to earn some profit can make your life much better and easier.
- Financial Goals: By investing and earning profit you can help yourself in settling your taxes and paying your debts. Always go for long-term investment at least set a goal of 10 years.
What’s Better Saving Or Investment?
Let me tell you everyone should do both of these savings and invest too. But there are some times when you need to make one a priority over another. You should focus on,
You should save when you don’t have enough money saved for your emergency funds because everybody needs it to cover any unexpected events in life. You can even face some type of debt that needs to be paid because it doesn’t make any sense to invest money for 10% when you have debts of 25%. And sometimes your savings are important when you have something planned for the such as a wedding or some sort of party in next 6 months at that time saving is important
You can invest when you have enough money saved for your emergency circumstances and you don’t have any debts left to be paid. If you have any goals like you want to buy a car in the future then you need to keep that money saved aside and the remaining can be invested. If you have all cleared out then yore in a great position to invest.
So finally all I need to say is saving is important and investing too because both help you in some or the other way, savings help you whenever you want, and investing helps you in some years with some profit. So both are good habits that we need to maintain and if you haven’t started it yet so go for it, now it may take some more time and you need to save some more but one day surely you can make a huge difference by saving and investing