Dear readers, we all know money doesn’t grow on trees. Money only grows when we did saving and investing wisely.
As I already told in my other articles that most of the people got confused between saving and investing. Just to get a more clear view, saving is nothing just a part of your salary. This part you kept aside for your future or emergency. [Check your Salary Increment Performance]
That part is deposited in the Bank account, FD, PPF that will give you nothing more than a lump-sum amount.
But the same part of your salary if investing in SIP, Mutual funds, Stock market, Real-Estate you will get more returns.
Also if you create an asset and those assets give you the money that is investing. Here, your money working for you instead of you are working for money. [Read more about Assets : How to Build Best Income Generating Assets?]
“Poor people see the dollar as a dollar to trade for something they want right now. Rich people see every dollar as a “seed” that can be planted to earn a hundred more dollars… than replanted to earn a thousand more dollars. – T. Harv Eker, Secrets of Millionaire Mind.”
SAVING AND INVESTING IN VALUES
This above table gives us a clear view that investing creates greater wealth over a longer period of time. [Read Also : Power Of Compounding]
“It is a fact that investing is risky but over longer periods of investing, the effect of risk gets removed”. – Peter Lynch
The compound interest plays an important role to create your wealth. It is a real backbone of an investment.
UNDERSTANDING - SAVING AND INVESTING
The savings and investing both are different but both have a very critical role in life. To get the actual difference between the two, below table helps you better:
There are lots of differences between savings and investments but the difference between the two is hairline only, which only become understand as follows:
- Firstly, we get a situation in our life that we have a money surplus, which means our earnings are more than we spend.
- Then, we accumulate this monthly surplus month on month till we feel secure about our needs or requirements.
- As we accumulate enough then we start to complete our requirements to buy things like a car, bikes, homes.
- We also want more other items like music systems, IPods, advance TV, smartphones, etc. to complete our unnecessary desires.
- Last, if after most of our needs accomplish than we think to check options where we can put more money that generates money for the future.
In all the above top 4 points, that is savings but at the last point where we think to generate more money for the future, that is an investment.
Here is another simple example of saving and investing.
Let’s assume a commodity ‘corn’.
If you have lots of corn in your hand either you consume that corn or you save in your store to consume in the future. You save that corn for future consumption that is called saving.
If the same corn is being planted immediately, that will yield more corn in the future. This will give you more stock of capital. That is called investing.
This is a simple financial education which only 25% of Indians can understand. [Read also: Are you Financially Educated?]
In the end, I will only say that investing is just a kind of saving, if you really want to be rich, have own house, big car have financial freedom, be a wealth creator and you want the inflation rate won’t affect your life then you must start investing & match your lifestyle with billionaires.
“Time is the greatest opportunity to grow your money & meet your financial goals. With a little you can start investing, your life starts changing & you can reach long term goals & success in your life which everybody wants”.