- February 18, 2020
- |Legal Moneylender
- 0
Everyone wishes to be financially secure in this day and age. The elders have seeded our mind that money should be invested in jewelry to receive returns. But with so many schemes offered by banks, it is usually very confusing to understand and decide what to do. But before you take any decision, ask yourself a few questions. Do you want to save money or do you want to invest? Both sound the same and returns are guaranteed, aren’t they? Not really, there are primary differences between saving and investing.
Purpose
Saving refers to keeping aside an amount of money for crucial times or a short-term goal. A short-term goal could be saving to buy a phone or a laptop. It makes you financially secure and stable. Banks provide various types of savings accounts where you can deposit your money. Almost everyone goes for savings these days, as it is easier to get done. While there also exists the factor of income. As your income increases, the more you are willing to save and consume less.
Investments, on the other hand, refers to money put in assets for long-term goals. These assets could be mutual funds, stocks, bonds or jewelry. As time passes by, these assets form capital in high amounts. The several purposes of investing includes buying a house, a car or splurging on your child’s wedding, etc.
For example, you put SGD 200 in a bank with an annual interest rate of 3%, which will equal to SGD 361 in 20 years. In another scenario, you invest SGD 200 with a yearly interest rate of 10%, and by the end of 20 years, you receive SGD 1,345.
You have to choose a goal and determine your risk tolerance. Investing is a better option for people with higher incomes, as they have a high-risk understanding than those with less income. It is quite logical, as one would not want to risk their entire income into something that is only potentially guaranteed, and thus, saving becomes the best option.
Risks
Since savings are deposited in well-reputed banks, your money stays safe and grows at a steady pace. There is a surety that your money will keep increasing and will become useable for future emergencies. Whereas, investments guarantee an excellent return only if put into quality equity markets and stocks. Equity market or the stock market is a market that provides capital to companies and a piece of ownership to the investors, that is you. Even with jewelry, the prices can either hike or decline depending on the economy during that period.
There may be times when the market will have its ups and downs, and hence, you should consult a financial advisor before investing in any stocks or assets. Since a financial advisor is an expert in such matters, he is very well aware of potential markets and assets. For instance, businesspeople invest an amount of money for a percent of the company or equity. The company may not always work well and end up facing losses, and the businessmen will also face losses. You should risk an amount equal to your risk tolerance, by analyzing your income and expenses. Expense is an essential monthly expenditure, such as rent, food, clothes, etc.
Returns
As mentioned in the risks section, your profits could either go uphill or downhill. Savings provide a steady recovery as promised but at a shallow interest. The interest will usually lie anywhere between 0.01% to 5%. Saving has low returns and investing has high returns.
Investing promises high returns with high risk. You could say that risks and returns are directly proportional. Investing in bank fixed deposits have an interest rate of up to 8% to 10%. Equity-based mutual fund schemes have higher potential for the long-term growth of value. In the end, it all depends on the quality of funds invested, which will carry higher potential as compared to savings at a period of five to ten years.
Liquidity
Liquidity in layman’s words refers to how easily accessible your money is once you invest or save. Saving is more liquid than investing. For example, if you put savings in your bank account, you can access it anytime. There are also liquid savings mutual funds, which let you access your money easily anytime but with high returns than the usual savings accounts.
Investing in assets comes with less liquidity and more documentation procedures. So when you buy a few stocks and want to access your money after ten years out of a 20 year period, you will have to go through lengthy documentation procedures, at a harsh price. Yes, to unlock your money from the stocks you invested in will cost you a severe price. You should invest some money in assets and put some aside for emergencies. Hence, before you decide between savings and investment, you better look at the details of the schemes and contracts and make sure that you will not have to spend half your money into unlocking your investments.
Time Period
The period of savings and investments depends on how long your scheme or contract lasts. Savings generally have a period of one to three years. While investments could be anywhere between 10 to 20 years. As mentioned in the purpose, you use savings to achieve short-term goals like a vacation or a laptop, and investing is used to achieve long-term goals like a wedding or a comfortable post-retirement life.
Experts advise saving from a young age, although it is never too late to do so. Also, long term goals do not necessarily go hand-in-hand with economic issues like inflation or decline in the stock market. Hence, you can opt for savings with simultaneously investing to achieve both, small and big dreams. Investments require you to be exceedingly patient for the growth of value, and so do savings but at a less period and secure access anytime between the scheme. Just consult a finance expert or advisor as they tend to know this market and field thoroughly, and can help you towards achieving your goals.
No.1 Licensed Moneylender in Singapore
If looking toward consolidating your debt must approach best licensed moneylender- BEST CREDIT. Besides that, our colleague is happy to serve everybody to solve your monetary problem. The origin we famous in town is because we are giving out a loan with the lowest interest rate.
Looking for cash? Act now, contact us at +65 6272 5538 or email us your inquiry at enquiry@bestcredit.sg. You like to get for a free consultation, just drop by office! Our office is located at Blk 372 Bukit Batok Street 31 #01-374 (Level 2) Singapore 650372
