Savings or Investments?
What are Savings?
Savings are the funds left over after subtracting a person's consumer spending from their disposable income over a given time period.
Some Advantages of Savings
- You can put your savings to immediate use. Because it is liquid, it can be used to pay bills, purchase items, and settle debts. Bonds and stocks cannot be "spent." First, exchange them for cash.
- The value of your savings account does not change in response to external factors.
- You have guaranteed Income to assist you in reaching your long-term objectives.
Disadvantages of Savings
- If you find that having easy access to your savings is too tempting, long-term saving may become difficult.
- If your savings account does not offer a competitive interest rate, inflation may eat away at the value of your earned interest.
What are Investments?
An investment is an asset or item purchased to earn income or increase in value.
Some Advantages of Investments
- Investing Will Assist You in Building Wealth
- Investments can also assist you in generating a consistent secondary (or primary) source of income.
Some Disadvantages of Investments
- High fees, inefficient taxation, poor trade execution, and the possibility of management abuse.
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A combination of both savings and investment is a valid and sustainable strategy. Money at bank through savings will also generate a return via interest. A balance may be important dependant on your personal circumstances