Some people engage in investment and saving to secure there are financial future, the two can be used interchangeable. On paper both go hand in hand but in reality, the two seem to be different financially. Essentially you saving the morning you have left after using your disposable income. The general idea is to put the remaining cash away in the account for future use or Investments. For instance you may use the money to find College a trip or just save it for future emergencies.
An investment if the money you commit to a cause that will provide you with future income or appreciation value.
In investment we use capital savings in money to buy assets that have a capability of bringing back some profits in the long run. Investments in many forms, you can invest in bonds, real estate property, and valuable jewelry to get some profit. It is considered an investment as long as the item you’re investing in has the ability to appreciate in value. The two main investment types include; Variable income investment and fixed income investments. While variable income investments have fluctuating interest rates fixed income investments offer fixed Interest rates.
The two main differences between saving and investment are the time and money you used to get returns from each. You can make savings for short periods of time to meet a specific financial objective. A substantial saving period will last for several years. Some people save to buy a phone, buy some jewellery or go for a vacation. Saving may be good for short term goals or investments. Unlike saving investments are long time financial plans that meet long-term financial goals. You can invest by buying a house, starting a business, or buying commercial real estate property among other reasons.
When it comes to investment you have little to no access to your finances. Access to your investment finances will depend on your investment types and your financial stability. For instance, if you have cleared mortgage payments on your home you can access equity funds from your lender that is equivalent to the price of your home. With savings you can access the cash in case of emergencies. You have free access to the money and you are free to withdraw some or all the savings if you wish to.
When compared investments can have a greater risk to your finances more than savings. Your money is safer at the bank more than it is at home. You are at less risk of losing your money when it is stored at the bank. Depending on the bank rates and the amount of money you save, you can gain a lot of Interest. With your investments, you can face major risk of possible returns depending on the market situation and Investment terms. For instance if you invest in a stock market there’s a great possibility you will lose all your money if you do not invest in a company with quality stocks.
In the long run investments are better than savings, investments have a high rate of return while most savings offer a lower interest. You should not expect to gain the same amount of money in savings as you do in investments.