|Posted on 29 October, 2015 at 13:25|
Saving vs. Investing --- What you will choose?
There are lots of reasons to invest. Whether it's for a down payment on a house, your child's education, or your retirement, your goal is to accumulate enough assets to meet your financial objectives.
Although saving and investing are often used to mean the same thing, they are not the same. If you simply deposit your money in a savings account, you would earn a small amount of interest. This can be an effective way to meet short-term goals or to provide for emergencies, but you may not keep up with inflation over the long term. Investing means that you put your money to work to achieve your long-term goals.
Investing is buying things of value that have the potential to provide income or increase in value over the long run. Of course, the potential for growth comes with the risk that your investments may lose value. Here are some key differences between saving and investing.
Safe Involves risk
Low return Offers potential to appreciate in value
Easily accessible Volatile over short-term periods
Used for short-term goals Used for mid- and long-term goals
There's always an element of risk with investing. Generally, the greater the potential for long-term returns, the greater the risk of short-term losses. That's why understanding investment risks and as well as your ability to tolerate risk is one of the first steps toward a successful investing strategy.