What is saving?
Saving can be described as the process of putting money aside for future use. It is essentially spending postponed.
When saving, the money is generally easily accessible. It’s important to consider that money saving plans don’t offer an interest rate of more than 6.5%, which normally does not even beat inflation. In some cases, your savings will provide you with the capital to feed your investments.
Saving comes with minimal risk. Saving money in a bank means that your rate of return is generally capped.
There are other options available however, such as high-interest savings accounts. One of the reasons that people often choose high interest savings accounts is that they can earn interest, while also giving people the option of being able to withdraw the funds very easily.
This type of account is also an ideal place to store money that you don’t want to spend on monthly expenses, but that you may wish to use in the near future. This type of account is ideal for achieving long-term investing and savings goals.
What is investing?
Investing is what you do with your savings in order to earn a return. The investment return is earned as interest, rent and dividends.
Higher returns are brought about by compound interest and it always involves risk. The more risk you are prepared to take, the higher the potential to earn higher returns.
An investor can anticipate making a profit due to advanced research and prudent selection of an appropriate investment vehicle.
Investing in stocks gives you a higher rate of return. This option is also much more liquid. Unlike investing in property, your cash is easily accessible.
When you are considering long-term investing and savings, it’s important to keep in mind that you need to have an investment goal. This is also a reason why it is generally harder to get access to the cash.
It’s important to make sure that you do the necessary research before you invest.