In the journey to achieving financial freedom, there are two things that an individual must do; save and invest. Saving and investing are two different things and, in a similar manner, serve different purposes in helping one acquire financial freedom. But what exactly are they and how do they differ? Follow through to discover the differences between saving and investing, and when one should do which. You will also learn the importance of these two things, especially when you want to take a housing loan.
Saving vs Investing
Saving simply means putting a portion of your money aside. That means that you do not spend all the money that you earn. It is advisable that individuals should put aside money with a purpose. More like, individuals should create a goal and then save money to accomplish that goal. Often people create a savings account and channel their savings there to avoid unnecessary spending. On the other hand, investing refers to setting aside some of your money and putting it in a system that makes the money increase in value. Most people invest in stocks, shares, and property.
When Should You Save?
Regardless of the amount of money that one makes, it is necessary that one sets aside savings. The common reasons to save are:
To Set Up an Emergency Funds Account
Uncertain things happen in life, such as the sudden loss of a source of income or the death of a loved one. come in handy during such situations. The purpose of emergency funds is to assure one of financial security.
Once you put aside money into your savings account, the next thing that you should do is consider investing your money. Just like when you set a certain percentage of your income to go to your savings, another percentage should go into making an investment.
Is It Time to Invest Yet?
Some of the signs to look for to determine whether you should start investing include:
You are Debt-Free
Debt, no matter how small, could stand in your way of gaining financial freedom. Financial experts advise individuals to first clear off their debt before thinking of making investments. Your lenders will only take your investments if you still owe them.
Time is Up
There is no such thing as being too young to invest. As a matter of fact, the earlier you start to invest in life, the more secure your future will be. With time, your investments will start paying off, and you will be grateful for investing early enough. As long as you have a stable source of income, you should be making investments.
Savings and investments are powerful tools in seeing yourself achieve your financial goals. However, you cannot afford to play around with money. It is advisable that you seek financial help from a finance expert to help you with both saving and investing. The professional will take time to understand your sources of income and financial goals. He or she will then guide you on the proper way to use these tools in achieving financial freedom, such as crafting an investment strategy. Financial experts also handle other issues that relate to money, such as when you want to take a housing loan or any other type of loan. Following guided financial advice is the key to realizing your financial goals.