One common financial question we all ask is if/when it’s okay to save or invest?
The answer lies in your financial situation and what goals you have.
I will be giving a short guide to help you decide when you should consider saving or investing.
Savings
In simple terms, to save is to put money aside. That is, you decide not to spend or make use of such funds for a while. You can have short term savings (ranging from a few days/weeks to a year) and you can also have long term savings (over a year).
Pros:
- You can fall back on your savings in case of an emergency
- To gather capital for investments or a business.
Cons:
- You may end up saving to spend if there are no specific goals and intent for your savings.
- In case of inflation, you may loose purchasing power over time.
Investment
Simply, to invest is to put money in a financial endeavor (business, stock exchange etc) with the expectation of profit.
Unlike savings, investment allows your money to grow steadily.
You can also have a long term or short term investment depending on your preference.
Pros:
- Returns of Investment.
- Your purchasing power is secured.
- Low chances of spending your investment.
Cons:
- A level of risk is involved.
- You might get swindled if you do not have an idea of what you are investing in.
I hope this has been of help to you. Reach out to me in the comment section if you have a comment or a question.