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Understanding the difference between saving and investing


Understanding the difference between saving and investing

Author: Kingsley Mayor Omenaiko

With the latest economic demands and the inevitable increase in the purchasing need of man, investment has become paramount.

Before I go further I would like to create an understanding of the difference between saving and investing.

Difference between saving and investing

Investing simply means an act of building wealth by making your money to work for you. When you buy things that hold or appreciate value, you are investing.

On the other hand, saving is the act of setting outside a portion of your income for future use. This is usually done through the regular savings account offered by commercial banks and other financial institutions.

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However, it is important to note that saving money in a bank is not an act of investment. But , investing could be an act of saving and growing wealth.

When you invest, you buy something that not only increase in value, but generates passive income overtime.

Choosing from savings and investing

Honestly, when it comes to choosing between saving and investing, there is no straight forward answer.

Saving and investing are both important. That is to say that they both have advantages. When you save up money, it should be seen as a means of accumulating money for an investment.

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It is quite clear that the money that accrues to a savings account cannot be compared to that which accrues from investment.

Profit is far better than interest. So once you have saved up enough, it is advisable for you to invest in order to multiply your Wealth.

Who can I invest in ?

The categories of investment can be grouped into traditional assets and alternative assets.

The traditional asset classes are those normal investment types that you often hear about. They include : stocks, bonds, treasury bills, etc.

Below is list of recommended investment initiatives

  • Real Estate
  • Stocks or Shares
  • Crypto currency
  • Index Fund
  • Forex
  • Start up a sole proprietorship business

On a final note, investment is crucial and delicate. You must approach it with utmost caution. Don’t just choose to invest in something someone you know is doing. Let it be on passion, skill , focus and commitment.

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Ensure you make proper research before you invest your funds. Investment is wealth if pursued from the right prospective.

Most celebrated people around the world today reached success as a result of continuous investment and expansion. So having your funds lying idle in your bank account is not commendable.

You can set aside some fraction of your funds, then develop a business idea borne out of your passion, then execute your business plan.

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