Savings & Investments
August 6th, 2007
What’s the difference between savings and investment? The simple definition is savings have very little risk with low limited returns, on the other hand, investments provide the opportunity for higher returns by managing risk.
By savings in the banks, you may earn interst and you feel good and secured as you watch your money grows overtime. But hang on , if you factor in inflation you realise that you actually have negative growth.
Alternatively, investment may provide income and capital gains with proper management of the risk involve in any form of investment. Investment comes in all sort of categories of investment assets such as Money market, Equity, Bonds, Derivatives Unit trust etc…..
There are two types of returns that can be derived from investments, that is income and capital gains. While income is derive from your investment in the form of rental or dividends, you get capital gains from selling the investment asset for a profit.
Finally the decision to choose between saving and investment lies within individual investment preference. While both vehicles provide risk and returns, the choice is up to the individual to find the one that suits their profile, whether risk averse or otherwise.
Tags: income, interest, Investments, returns, risk, savingsPopularity: 78% [?]
December 29th, 2007 at 6:42 am
Another difference between savings and investments is their purposes.
Savings should be placed aside for rainy days and for any sum of money that you will need within the next 3-5 years.
Investments are great to grow your money if you do not need the money in the near future. You should not invest the money you need in the near future into investments- especially the risky ones. This is because you could easily lose your initial capital on it.
April 7th, 2008 at 4:04 pm
Nice explanation, Thanks.
Cheers,
Forex Price Action: Support Resistance
April 21st, 2008 at 3:36 am
Another question is whether you want to be an active investor. As a person who chose to trade Forex from home myself, rather than leave my investments with a stock broker to handle, I can tell you I prefer the hands on aspect better.
I’ve been more succesful with currency trading than I ever was with stocks .
-Max
April 30th, 2008 at 7:06 pm
In my opinion its the best to do both. Its best to save some money and invest the rest. Investment does need risk management but if managed properly it can give a good return.
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