Nowadays, maintaining a job for more than a year is already an achievement. But having a stable source of income from employment isn’t enough to improve the quality of your life. In order to do so, you need to be smart when it comes to growing your money. You need to either deposit your earnings in a bank or start an investment portfolio.
But is saving better than investing or is the latter better than the former? Should you be sticking to one strategy on your way to becoming rich? Today, we’ll differentiate saving and investing and try to figure out which one’s the optimal way to grow your money.
Is There a Difference Between Saving and Investing?
It’s easy to mistake one over the other. After all, both concepts involve setting aside a good portion of your income and keeping it somewhere else. Basically, the difference lies with what you’re going to do with the portion you took from your monthly income.
Saving involves taking some of your income and placing it in safe and liquid securities or accounts. Liquid doesn’t involve beverages, mind you. It means the account where you’re placing your money can be sold or accessed in a short amount of time.
Investing involves taking some of your income to buy an asset that has a good probability of generating returns over time. This is where mutual funds, stocks, UITFs, and other overwhelming investment terms come in. It has a steep learning curve, for sure.
Why Should You Start Saving?
It’s safe to say that you’ve already understood the concept of saving money since you were a kid. Remember when you used to save money for an upcoming concert or the latest video game title? Now that you’re an adult, you should continue doing so—only with a few tweaks. Basically, if you have a limited knowledge of investing, start by saving money first.
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