If you can’t decide whether you should save or invest your money, you need to have a look at your goals and your financial situation.
Putting money aside so that you have some ready for when you need it either for a big purchase or to cover yourself when emergencies arise is relatively simple to do, you don’t need to learn much, you just need to look into which savings account will give you the most interest.
Investing, on the other hand, requires a little more work, choosing the right thing to invest in such as property or stocks can be tricky and risky, however, if you choose carefully, the rewards are high, and your money will grow.
If you’re unsure of what you spend each month, then use a Budget planner to get a better idea of your finances. Once you have this information you can start budgeting and save enough to buy what you want whether it’s a deposit for a house, your dream wedding or around the world trip – don’t think anything is out of reach, it all adds up. You can then start to think about investing your money.
Are your goals short, medium or long-term? Do you need or want money in the next five years? Five to ten years? Or is it more like over ten years?
If your goals are short-term then generally, saving into cash deposits, like bank accounts, are the best option, if you’re investing, the stock market might go up or down in the short-term, and if you invest for less than five years, you might make a loss.
For the medium-term, cash deposits are still a good option but investing could be the answer if you’re willing to take a risk to achieve a higher return on your investment. If your goal is to buy a house in six years, it might be safer to put your money into a savings account. However, your savings will still be at risk from inflation if the interest you earn on your savings doesn’t keep up with the rate of inflation.
However, if you can be more flexible and prepared to take some risk, then investing your money will see a higher return on your investment, than would be possible by saving alone. Remember, investments can come in all shapes and sizes too. You could be investing in a used van from Southern Commercial Sales to add a delivery service to your business and increase your profits, or you could be investing in a property to rent out to have extra income.
If you’re looking at saving for your retirement or something else further away, then investing is probably the way to go. Inflation can affect the value of cash savings over the medium and long-term, but the stock market tends to do better than cash over the long-term providing an opportunity for higher returns on any money invested over time. You can also reduce the risk when you invest by spreading your money across different types of investments.
