Saving or investing, which way to go?

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To save or invest, that is the question! Image from http://www.moneysavingexpert.com/savings/which-saving-account

What comes to your mind when its pay day at the work place? When that cheque you have been looking forward to all month checks in. Do you think it’s time you took your car back to the road because you can afford a full tank without straining? Do you look at pay day as an opportunity to indulge in drinking on the pretext of rewarding yourself? If these two questions describe you, it’s about time you considered how prudent you are when it comes to spending your money.

To save or invest, that is the question! Image from http://www.moneysavingexpert.com/savings/which-saving-account
To save or invest, that is the question! Image from http://www.moneysavingexpert.com/savings/which-saving-account

A prudent person thinks in the lines of saving and investing. Saving is a hedge against the proverbial rainy days but it limits you from the benefits that come with investing. Investments offer returns unlike money that sit idle in an account in the bank. However, investments come with risks that may make you lose some if not all your money. While saving focuses on short term goals and emergencies, investing focuses on long term goals and earnings that the principal amount invested will generate. Investing is the way to go but before you start, you should have some savings for like six months to cater for your day-to-day expenses as your attention will mostly be on your investments. For you to benefit from investing:-

a) Have clear investment objectives

Know exactly why you want to start investing and the span of time you are willing to wait prior to your investments generating tangible returns for you. Again, take time to understand the associated risks that come with your kind of investments. For example the risks involved associated with shares are different those associated with buying land.

b) Spread your investments over different areas

We all know what they say about putting all eggs in one basket. To save yourself from the heartache of losing all your money in one investment, you should spread your money over various investments such as bonds, unit trusts, shares am among other viable areas

c) Do not procrastinate

Many people make the mistake of waiting until they get a certain amount of money that they think is enough for investing. The problem with this behaviour is that, many people end up finding other reasons for spending. Moreover, by letting your money stay idle in an account somewhere, you deny yourself a chance of getting returns. Inflation also erodes the value of your money and you should make a decision to invest in areas that appreciate in value such as land.

d) Seek counsel

It’s okay to have money and not know where to invest it in. There are many professionals and consultants that can guide you on the proper areas to invest in. These are the people you should counsel from as they will inform you on the nitty-gritties of investment.

e) Shun fear

Take your fears head on. Embrace them. Of course there is going to be a bunch of naysayers who try to discourage you, but for you to reap maximum benefits, you must be a risk taker.

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