Investment vs. Savings

Invest and/or save with the surplus money you earn and watch your returns grow.

09:23 23 September 2013

A financially successful person always knows when exactly to invest and when to save. But the decision to go either way is very difficult, and many things have to be taken into account.

Of course, as regards investments or savings, the solutions differ from person to person. Generally speaking, the best thing for your financial health is to both invest and save money at the same time. But that is rarely possible for most of us.

Let's take a look at some things to take into consideration before taking this very important decision.

• Make a plan. Think about what exactly you want do to in both short and long term. Knowing what your goals are is the first step to making any decision, especially an investment decision;

 

• If your plans are long-term, such as a pension, then it would make more sense to put your money into something. If your plans are short-term ones then you should probably want to look for cash savings.

 

• Savings are generally low-risk methods of earning money, as you have a fixed interest rate and know almost precisely how much you are going to earn in the next years, so if you don't want to take any risk, choose saving over investing;

 

• if you want to earn more money and you are willing to take risks to do that, then you should definitely choose investments over savings – as savings do not generate as much earnings;

If you are not sure about taking risks but still want to have the opportunity to earn more money in the future, then you can really try to both invest and save at the same time – of course, you will spend less on each of them, but you will have the comfort of knowing that at least your savings bring a secure profit, while your investments could bring much more profit in the future.