Investing Vs. Saving: Your Practical Guide.
posted on Jul 27, 2020 | 433 likes
Everything you need to know
Save it, or invest it. Which one should you do?
Does these two routes lead to the same destination? What are the pros and cons of taking either route?
Truth is, it’s your decision to make whether saving or investing is the better route to achieving what you are aiming at, however, for certain goals, one is definitely going to be more suited than the other.
We are going to evaluate both, look at their pros and cons, and then let you make the decision.
Whether it’s your first salary or you have been earning for over 20 years, it can be unclear or a bit daunting to know when you should be saving and when you should be investing.
For many, saving is the safer route because it’s perceived as faster, the amount in your bank account won’t typically decrease unless you withdraw funds, it is also easily accessible, but interest rates on savings accounts don’t allow your money to grow very quickly.
Investment however has the potential to produce higher returns, but you will need to wait for a while and be willing to take some risks.
So, how do you know when you should stick to the safer route and save or risk more to earn bigger returns and invest? Here’s what you need to know.
The Savings Route
Pros of saving
Saving rather than investing allows you to reach your goal on time as long as you save the proper amount each month.
Take the total you need to save and divide it by the number of months until you need to reach your goal to find the amount you need to save each month.
With savings, you can also easily reach your funds and solve super emergency needs without having to go through any liquidation process.
Cons of savings
Due to inflation, the money you save will decrease in value each year. If you earn interest, that interest may partially offset the negative effect of inflation. Unfortunately, interest rates rarely keep up with the rate of inflation.
Saving also means you’ll have to set aside more money each month than you would if you received higher returns on investing.
If you’re only earning one percent interest in a savings account but could earn an eight percent return on investing, you’ll have to make up for that seven percent difference by putting more money in your savings account to reach your goal at the same time.
Since your savings fund is easily reachable, it is difficult to keep away from the money, thereby reaching out in ‘seemingly pressing’ situations and spending the money on other things other than your earlier set goal.
The Investing Route
Pros of investing
If you have a long time until you need to meet your goal, investment is your best rout because your returns will compound.
Basically, this means in addition to a higher rate of return on investments, your investment earnings will also earn money over time.
The benefit of higher compounding returns is you won’t have to invest as much each month as you would need to save each month to reach your goal.
Cons of investing
When you opt to invest rather than save your money, you will have restricted access to the money over the period of the investment.
That means unlike savings, you can’t just go to the bank and withdraw the money, you have to pass through some official liquidation processes, and depending on the financial house you are using, it could take hours or days before your funds hit your account.
One sweet thing however to note is that if you invest with Page Financials, we process customers’ investment liquidation requests in less than 24hours. With this, you are sure that you will always be on time to solve that need.
So, which should you choose?
Like we established earlier, this is completely your question to answer depending on what you want to achieve.
However, as financial experts, we suggest that you pay more consideration to investing because as you can see clearly, it yields more returns.
This is basically a smart way of getting your money to work for you.
In the past, people used to be hesitant about investing due to the perceived complexities associated with it, however, the intervention of financial houses in Nigeria has made investments simpler and transparent.
All you need to do is either call 017007245 or send an email to our customer service at firstname.lastname@example.org and you will be assisted to get started immediately.
When is the right time to invest?
Financial analysts have long adopted the old Chinees saying “The best time to plant a tree was 20 years ago. The second-best time is now.”
You see, investment is like planting a tree, it grows daily and fleshes out into maturity as the years go by.
Whatever it is you want to do in the future, now is the time to start investing.
The longer you delay in getting starting with investing, the more money you will need to put away monthly to be able to achieve your target.
Contrary to popular belief, investing is very simple, if you can logon to Facebook and create a new account, or chat with friends on WhatsApp, then you can also open and setup an investment account for yourself with a Page Financials
If you have some money that you won't need for a while, or you simply want to build a robust investment lifestyle, account, then invest with us and watch your money grow.
So, are you ready to start investing? Or want to start another investment line?