Whether to invest or save, you must consider the pros and cons of both options. It will help you judge which one will benefit you better. Some advantages only investing can give you, just as there are advantages you can only get from saving.
Today will share with you which is the better option between whether to invest or save. We will also cover how you can take a step closer to the best choice for your situation.
Invest or Save: Which one is better?
These two are essential concepts that can help you build a solid and sound financial foundation. However, they aren’t the same. Both options can help you achieve good financial status, but you must differentiate between the best time to invest and when it is best to invest your money.
The main difference between whether to invest or save is the amount of risk you will be taking. Saving your money would result in you having minimal returns, but you can be sure that your hard-earned cash is safe and is at no risk of being taken away from you at any time.
On the other hand, investing will surely yield you higher returns, but you will also be taking the risk of loss if you decide to invest your money.
Saving your money
We all know what saving is: it is the act of putting your money aside, whether in banks or for safekeeping at home, so that you can easily access it when the need arises. If it all boils down to whether to invest or save, saving can help you achieve your future goals without you having to risk losing your money in the long run.
However, since saving takes a relatively low risk, the rewards you can reap from it match the risk you are willing to take. Usually, banks have meager interest rates, and you would have to meet a minimum requirement or a “maintaining balance” for your money not to have any deductions.
Investing your money
Investing your money is almost the same as saving it in the sense that you will be putting your money away for future use. The only difference is, in investing, you will have a higher return in exchange for taking a higher risk.
With saving, on the other hand, you will just put your money somewhere else and let it sit there. If you save in a bank, it will earn interest.
Typical investments include bonds, stocks, mutual funds, and exchange-traded funds (ETFs). Another thing is, those who invest their money usually decide to keep their fund in the investment for at least five years to yield higher returns.
Choosing between whether to invest or save your money depends on your current financial status and capability.
Before you decide whether you should invest or save, you have to make careful considerations first. Nothing is better than the other, and only you can determine which is more feasible given your financial position. Make sure to create a financial plan and weigh your options carefully before taking on a new venture.
If you decide to get started on investing in your 20s, check out what we have to say here.