To Save Or To Invest?
It can be tempting to sweep saving and investing under the single blanket of good financial habits.’ After all, saving and investing both allow you to build wealth and work towards big financial goals.
But the reality is that saving and investing are two distinct actions that have dramatically different impacts on your finances.
First, saving is the choice to tuck some funds away for future use. As you build your savings, these funds will be available to access quickly. With that, savings are the right choice for funds you want to be able to access on short notice.
On the other hand, investing comes with more risk. Although you are also putting these funds away for the future, there is more risk involved. In exchange for this higher risk, you hope to achieve a higher rate of return.
Advantages of savings
Let's start out with the benefits of bulking up your savings.. Here are some advantages of savings you should be aware of:
Low risk: With savings there’s hardly any risk involved.
Easy access: You can tap into your funds anytime you need them.
Quick to start: You won’t have to learn too much about finances to begin saving.
Disadvantages of savings
Of course, there are some disadvantages to saving. Here’s what you need to know:
Low returns: Savings are low risk, which means they come with low returns. Invade of a savings account these rates are pre-determined, they will often be lower than your potential earnings with an investment.
Inflation: Inflation creates rising prices that slowly erode the value of your money. In some cases, savings rates may not keep pace with the rising inflation.
Advantages of investment
Here are the advantages of investment that you should consider:
Higher returns: The historic returns of some investments point to higher returns which means you can grow your funds.
Liquidity: If you invest in stocks, then they can be sold for cash relatively easily.
Potential to beat inflation: With the potential for higher returns, you may be able to prevent inflation from destroying your purchasing power.
Disadvantages of investment
Although there are significant advantages to investing, there are some drawbacks to consider. Here are a few cons to investing:
No guarantee of returns: Investments can fluctuate in value. Although there are investments with less volatility involved, the returns are never guaranteed.
Risk: A big difference in savings and investment is the risk of losing your money. However, with Nurture Your Income your losses are compensated with discounts on various products. So it’s a win-win situation in both cases.
Knowledge required: Successful investing requires some knowledge before you get started. Nurture Your Income takes care of the ‘how’ and ‘where’ for you so you can enjoy the benefits of investing without the hassle of figuring out where to invest.
Begin your investing journey with Nurture Your Income; a mobile app that helps beginners invest in stocks easily and recover losses instantly, at no cost.
Saving and investing both play an important part in building a brighter financial future. Both are good habits to create as you work to build your wealth. The difference between savings and investment does matter. Throughout your financial journey, you’ll need to make the choice to funnel extra funds into savings or investments.
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