INVESTMENT VS SAVINGS
As a young person, you are taught to save; put those little chunks of extra money you have into your savings account. That’s supposed to be enough. No one ever pushes you to invest plus, the small profit margin in it is not always enticing but, do you know that starting your investment journey at a young age is one of the best things you can do for yourself?
Why you might ask?
It’s simple! When saving, you are simply putting the money away maybe for emergencies and other things but when investing, you are not just putting the money aside, you are also putting the money to work for you by putting it in ventures or using it to buy things that will increase its value.
Now you may be saying ‘I’ll get to that later, I’m still in college so I don’t have to worry about that now’, well you actually do. Ever heard the phrase ‘the earlier, the better’? It’s true!
But why? You may ask. Why start early on investments? What is the need you want to desperately meet that demands you put your money to work for you now?
Let’s look at a few.
- Build Healthy Wealth: growing your money
Investing your money can allow you to grow it. Most investment vehicles, such as stocks, certificates of deposit, or bonds, offer returns on your money over the long term. This return allows your money to build, creating wealth over time.
- Planing for the future: Save for retirement
As a student or part of the workforce, you should be saving money for retirement. Put your retirement savings into a portfolio of investments, such as stocks, bonds, mutual funds, real estate, businesses, or precious metals. Then, at retirement age, you can live off funds earned from these investments.
In order to grow your money, you need to put it in a place where it can earn a high rate of return. The higher the rate of return, the more money you will earn. Investment vehicles tend to offer the opportunity to earn higher rates of return than savings accounts. Therefore, if you want the chance to earn a higher return on your money, you will need to explore investing your money.
Based on your personal tolerance of risk, you may want to consider being riskier at a younger age with your investments. Greater risk increases your chances of earning greater wealth. Becoming more conservative with your investments as you grow older can be wise, especially as you near retirement age.
- Reach financial goals faster
Investing can help you reach big financial goals. If your money is earning a higher rate of return than a savings account, you will be earning more money both over the long term and within a faster period. This return on your investments can be used toward major financial goals, such as buying a home, buying a car, starting your own business, or putting your children through college.
- The Adventure; Be part of a new venture
New ventures need the backing of money, and they look to investors for that backing. Some investors may like the excitement of investing in a new, cutting-edge product or service or being part of something like a business or film that introduces them to a glamorous world.