When it comes to finances, the most common goal is to increase wealth. The question is: which works best to achieve this goal – savings or investments? The truth is that savings and investments go hand in hand. In fact, many would go so far as to say that there is no such thing as ‘savings’, but rather low risk and high risk investments. Let us delve into this and discuss.
When the term ‘investment’ is mentioned, people automatically associate it with risky financial decisions. Little do they know that there are many different types of investments available, many of which are actually very low risk or are practically risk-free. Did you know that when you open up a basic savings account, you are still investing your money? It’s true. And, while you might not be investing directly in unit trusts or in expensive assets, you are investing your money with the bank. The only difference between this kind of investment and an investment in the stock market, for example, is that it is a very low risk option that obviously results in lower returns.
Therefore, it is not a matter of deciding whether to save or invest, but a matter of deciding what kind of risk you are willing to take in order to grow your wealth. If you are happy with earning a small amount of interest, a simple savings account will be just fine. However, if you want to enjoy greater capital gains, you might want to consider options like fixed deposits and notice accounts. If you really want to take advantage of the returns that you will receive, you might also want to learn more about tax-free options. Yes, they really do exist!
In conclusion, it is very important to remember that, depending on the type of investment option that you choose, when you invest your money, you might not always be able to access it again at a moment’s notice. As a result, it is essential that you ensure that your finances are stable enough before making any investment decisions for the future. Consider entering into both low risk (like a basic savings account) and medium risk investments simultaneously. This will ensure that you are fully covered should you require instant cash to remedy any problems or emergencies that may arise unexpectedly. With a stable savings account and a notable investment portfolio, you will be well on your way to increasing your capital and living the lifestyle that you have always dreamed of.