Should You Invest Or Should You Save?

Posted on May 3 2017 - 3:34pm by Editorial Staff

When you come into some money, or you just have money left over each month, then you might be asking yourself the very valid question of if you should invest the money or you should save it. The answer, of course, will depend a lot on what your end financial goals are, as well as your current financial situation. Doing one or the other is a much better idea than just having the money left in a current account, though. Savings is putting some money aside bit by bit, and it could be to put towards something specific. Investing is putting your money somewhere in the hope that it will grow and increase in value.

If you have debts to clear, then it is a good idea to clear those before you start thinking about any kind of investing or saving. So one of the first things to do is to look at your financial situation; would your family or relatives be able to manage if you were to pass away? If the answer is no, then you know that you’re probably not in the best place to be saving or investing. If the answer is yes, then read on. Are you ready to invest?

To find out if you are ready to start investing money, then you need to think of the type of goals that you have. It is a good idea to divide up the goals that you have into three categories; short-term goals, medium-term goals, and long-term goals. Short-term goals could be classed as things that you are planning on or need the money for in less than five years. As you will want the money soon, investing could be a little tricky as the market can be quite volatile. So for many, it could be too risky. So often for shorter-term financial goals, putting money into things like savings accounts could be the best way to go.

Medium-term goals would be things that you need the money for within about ten years. Cash in savings accounts can be a good way to make some extra on the money. So if you have a financial goal to buy a new car outright, or to buy a house with a deposit, then you know what you will be able to gain in that time. Investing or doing something like online trading with could also be an option for medium-term goals. There is obviously a little more risk involved with this kind of thing. But it is quite possible to make more money that way than you would in the bank.

Longer-term goals are anything where you won’t need the money for a long time, over ten years or more. So it could be saving for a child’s college fund, or just a savings account for your retirement years. Investing is often the best avenue to go down in this case. This is because inflation can affect the value of your cash, meaning that you won’t get as much for your money in the future. The stock market tends to do better over long-term, as you can ride out the peaks and troughs of the business until you are ready to sell.

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