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Invest Or Save? What Are Your Options?

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People often become confused over the diference between investing and saving. It is really important to become knowledgeable on where the best place is, to keep your well earned cash safe, as well as for financial future gain. The decision to save or invest depends entirely upon how long you are prepared to tie up your cash. There are options suitable for saving for a short term goal, like a deposit on a house, or if you’re able to invest for long term goals such as planning an early retirement. This article aims to highlight the advantages and disadvantages of investing and saving, so that you will be able to make a more informed choice.

Financial goals

If you have a lump sum of money to save or invest, you need to decide how soon you are likely to need access to the money. If you have the luxury of not needing access for a number of years an investment plan would be your best option as you are more likely to receive a better return on your investment than putting your cash into a savings account.

financial goals

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If you know that you will require access to your money in the near future for a house purchase, new car or holiday your savings would be best placed in a savings account.  

What are investments?

The process of investment involves buying an asset in the form of stocks, bonds, shares, property and commodities. Investing your money is not a completely risk free option, however investments that perform well are extremely profitable. You should see investing your money as a long term option, the longer you invest, the higher potential returns. It is a good idea to seek advice on how you can build an investment portfolio. Having a range of investments will allow for fluctuations in the market, as well as cushioning investments that don’t perform as well as expected.

What are savings?

Saving money is simply the process of putting cash into a savings account. Saving is a low risk option as your money is safe and you can access it easily. The downfall of saving rather than investing is that potential returns are lower and the interest received on your savings is governed by the interest rate, which is currently low. Your savings however, will steadily grow and it is easy to develop a savings plan by allocating a proportion of your salary to be put into a savings account. There are many savings accounts available, all with their own individual benefits, do a thorough search to decide on the best account for your individual goal.

To conclude, ensure you develop a clear idea of your financial goals, so that you can choose the best method of making the most of your savings. Long term financial goals would be better achieved by investing your money and short term goals would be better achieved by placing money directly into a savings account. You could even consider a mixture of the two!