There are countless of new investors today. The sad thing though is, not many of these investors do understand that the difference between investing money and saving money. As a matter of fact, these two serve different purposes and play unique roles when it comes to your balance sheet and financial strategy. While taking the time to les mer om sms lån på minuttet to increase your odds of taking a loan, the next question to be answered is, what you shall do next when you have it? Should you invest it or save it in the bank?
It is important that you be clear about the two concepts before starting your journey of building your wealth and financial independence. Believe it or not, taking the time to grasp its notion will save you from stress and headache in the long run.
What is actually meant by Saving Money?
Basically speaking, saving money is a process of setting aside your cold cash and putting it in a safe and liquid account or securities. This may include your savings accounts and checking accounts that’s secured by the FDIC.
Above everything else, cash reserves should be there when you need them. Generally, a lot of famed and respectable investors are advocating lots of hidden cash on hand somewhere that only them know about that they can get in times of need.
What about Investing Money?
When it comes to investing your money, this is deemed as buying assets that you think or believe will have a good possibility of generating acceptable or safe return of investment in the long run. Ultimately, this can make you wealthier even if it means that you have to suffer from volatility for years.
True investments are being supported by margin of safety, which is typically in form of owner earnings or assets. As what you know, the ideal investments tend to be productive assets similar to the following:
- Real estate
- Bonds and;
Should You Invest First or Save First?
Saving cash should come first before investing. Think of your savings as the foundation upon which your financial independence is built. The reason is fairly simple, unless you have inherited big amount of wealth, it’s your savings that’ll supply you with capital needed to feed your investments. If ever times get rough and you need money, you will most likely be selling your investments at the worst instances, which is clearly not a formula to be rich.