Saving and Investing: connection and meaning
Saving and Investing are two terms that are closely related to each other in the financial niche. This article with explain different aspects of saving and investing money, in the context of modern day economy as well as the relationship between the two.
Saving and investing are a part of many people’s lifes in the modern society. Typically, when saying “savings”, we mea a certain part of the income, which is set aside and never consumed, in other words cutting down on consuming goods. This way, by affecting consuming, we also directly create savings. Savings are always great to have, whether you are saving for a car, housing, or simply stashing money “just in case”. In order to safe keep your savings, one of the most popular options is opening a savings account. By making regular payments from your bank account to a savings account, even in small sums, you will be able to effectively save up the desired sums. At first though, you will have to decide which sum you are looking to set aside on a regular basis. In addition to that, you will also be receiving a small percentage from your overall balance on the savings account as income.
There’s a direct connection between the investing and savings terms, in particular, the fact that savings are usually the basis for any investment. Investing can many different purposes, for example, the expansion and improvement of manufacturing. Investments can be productive, such as spending on buildings and equipment, and unproductive, that is financial. Most often unproductive investments are buying of shares, leasing, and credit loans. There are also many speculative investments, the purpose of which is to buy certain instruments only to sell them later after price fluctuations. Investments can be short term (less than a year), midterm (1-3 years) and long term (more than 3-5 years). It is commonly believed that to attract investment companies should meet four basic requirements:
- Have a well developed business plan , in order to command trust and indicate a low level of risk;
- Have a good reputation, to solidify a scam-proof appearance to customers;
- Conduct an open, transparent business;
- The internal policies of a country have a great impact on the level of investment – economically stable countries are a desired object for investment.
Investing and you
Although investing and savings are two very good paths for improving your well being investments can become a more lucrative income for you when compared to savings accounts. If you have decided to invest your funds, you will be open to a wide field of opportunities for investment, including bonds, stocks, and realty. There are pros and cons for each type of investment, as well as individual risks and dangers, plus peculiar conditions that you have to be aware of. When you make your choice of instrument to invest in make sure to think through your investment plan beforehand. For example, you have to decide what role this investment will play: maybe, you are looking for a regular income, or you are looking to concentrate on a more long term investment with the goal to maximize your return in time. Thus, you have to determine, how much income you are looking to get with your investment. Before choosing the type of investment which you would like to get involved with, you also have to evaluate the level of risk that you are ready to take before you make money on any sort of investment.
As a conclusion, we must say that investing and savings are a very promising and interesting way to increase your balance, and is accessible to anyone looking to try something new. Do consider starting to save up your money, and you will discover a brave new world of investment, trading, and exchange markets.