Do I save or invest 10% of my monthly income? What are the kinds of investments I can embark on if I were to invest?
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If you’re trying to increase your wealth, you know that unnecessary spending is not for you. However, choosing between saving and investing is a little complicated. Both can be beneficial, but one is often better than the other in a given situation. It all boils down to where you are in your life, what your goals are, and what kind of savings you already have. If you have no savings at all, then this should be your priority. Everyone should have an emergency fund they can use for unforeseen circumstances.
Saving is also a good choice if you plan a big purchase in the near future, It’s better to keep the money for a down payment in a savings account rather than investing it, because the stock market can be volatile in the short term. If your investments lose their value, you will lose that money.
You should also consider saving when you want access to your money quickly. Investing can be lucrative, but it takes time to sell your investments and get the money back into your bank account.
It is important that you work on saving first if you don’t have an emergency fund. Investing should also be in the plan of those who already have an emergency fund as well. The average savings account’s annual percentage yield is 0.08%. That means if you make an initial investment of $1,000, you’ll earn only $0.80 in interest after a year. Of course, it’s possible that savings account interest rates will rise. That means that the money you’re putting into your savings account will actually lose value over time. Investing has risks, but as long as you know what you’re doing, then it’s possible to get higher returns. This gives you a much faster means to grow your wealth, as long as you’re willing to be patient and clam for the market’s ups and downs.