Should You Save or Invest Your Money?
Many people question whether they should be saving or investing their money. It depends wholly on what your goals are and what financial situation you are currently in. Yes, it is true that investing can grow your savings. However, there are considerations you should make when deciding whether investing is right for your current situation.
Here is a quick guide that should help you decide whether short term savings or long term investing is the right choice for you.
What Is The Difference?
Saving is simply putting money aside. As much and as often as you can afford to. You’re usually saving for something in particular such as a family holiday, home deposit, a car or as a contingency fund for when emergencies strike.
You usually utilize tools such as a savings account with a bank or building society.
Whereas investing is using some of your money to try and grow it. You buy things that are likely to in value so you can see a return on your investment such as stocks, property, or according to this bitcoin Code review, people are using this new option too.
Really, everyone should consider having an emergency savings fund. You should try to have at least three months’ worth of living expenses put to aside in an instant access account. Include the essentials such as food, rent, mortgage, school fees, and any other essential outgoings. You are enabling yourself to have financial security if anything was to go wrong at any point.
Continue To Save
Once you’ve achieved the goal of your emergency fund you should continue to save and build on your funds. You should look to save around ten percent of your income on a monthly basis. If you can’t save this amount save as much as you can.
Even if it’s a very small amount.
It’s a good idea to set a goal, and then aim to work towards it. Try to not be tempted into using your emergency fund though.
This is the time when you may consider investing your savings, rather than saving for a wedding, house or car, you invest your money to try and get a return.
When You Shouldn’t Be Saving
Simply, you should always try to save unless your money is desperately needed elsewhere. If there is something important that your money needs to go then you shouldn’t be saving. For example, if you need to pay down some debts.
You should look after these as a priority before trying to save.
If you have payment plans in place you may still have the opportunity to save an emergency fund.
Is It The Right Time For Investing?
The answer to this will solely depend on your own goals.
Short-term Goals – Your five-year plan. You would normally use a bank account savings account.
Medium-term goals – Five to ten-year plan. Cash deposits may be the best idea however, if you want to risk your money then you could achieve a better return if you invest. If your saving for something such as a house it may not be worth the risk.
Longer-term goals – These are normally where you would invest and release the funds around retirement, or after ten years. If you’re looking to invest you don’t want to need to take the money for at least ten years, it’s normally longer.
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When investing it’s best to make sure you know what you’re doing and possibly speak to an advisor.
Remember investment is never a guarantee.
Personally, I prefer taking moderate risk. That way, I am guaranteed growth and have the potential of seeing a larger return.
Do you have any other tips about saving vs investing?
Let me know, til then–cheers m’deres!
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Nancy Polanco is a freelance journalist, lifestyle content creator, and editor of Whispered Inspirations. She is a proud Mom to Gabby and Michaela, and wife to Darasak. Having worked as part of a health care team for almost a decade, Nancy is happy to be back to her passion. She is a contributor to the Huffington Post, TODAY’s Parents, and an Oprah Magazine Brand Ambassador.