Many young adults who start earning money are often advised to either make savings or invest. However, before doing so, it is important for them to understand the basics of these two essential processes. Moreover, an important question arises here – is it ideal for a beginner to start saving or investing, or to do both together? In this article, we will answer this question by outlining the features of the article.
Whether you've been working on your finances for years or you've just started, it can be hard to know when you should be saving and when you should be investing.
Savings is comparatively a safer route, because the rupees amount on your bank account won't normally reduce unless you withdraw funds, but interest rates on savings accounts don't allow your money to grow very quickly. Unfortunately, interest rates are often lower than inflation. This means that your savings may lose purchasing power over time.
It's always tempting for all of us to want to invest in order to get higher returns and to beat inflation. Unfortunately, the value of your investment is not always going to rise. In some cases, investment can become completely worthless.
So, how do you know when you're supposed to stick to a safer route and save or risk more to earn higher returns and invest?
Pros & Cons of Savings:
Pros:
Cons:
When You Should Save?
Saving rather than investing also allows you to achieve your goal on time as long as you save the right amount each month. Take the total amount you need to save and divide it by the number of months until you have reached your goal to find the amount you need to save each month.
Pros & Cons of Invsting:
Pros:
Cons:
When You Should Invest?
Investment gives your money the potential to grow faster than you could in a savings account. If you have a long time to meet your goal, your returns will increase. Basically, this means that, in addition to a higher rate of return on investment, your investment earnings will also make money over time. Investing wisely into the share market can get maximum returns on your investment. If you are just starting out you can also join online share market classes to learn about stock market and achieve your goals faster.
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