Contrast Between Saving and Investing – Money Mindz

By | 16/05/2018
Contrast Between Saving and Investing

MoneyMindz – India’s First Free Online/On-call Financial Advisory Portal – Contrast Between Saving and Investing

These two terms are utilized correspondently often. How to know the contrast? Read further.

How do you create wealth if you were to start from scrap?

Let’s say you have nothing with you and have to start with no money. You begin accumulating wealth by doing the following:-

1. Earning more than expenditure.

You spend 14,995$ if you earn 15.000$, for instance.

2. Begin accruing surplus money monthly or yearly.

If you earn 15,000$ and spend 14,995$ you can reduce 995$ and save 1000$.

3. When circumstances are enhanced, purchasing a house or going for a vacation becomes easier.

If you have managed to save 1000$ each month for five years, you have 60,000$ with you as savings! This is called saving money.

4. You want to generate more wealth now.

After you have fulfilled your dream vacation or bought your dream house/car, you begin searching for privileges to put the remaining money. This is called investing money.

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First, you save money. Then, you invest money. Of Course, you’ve financial institutions giving you loans nowadays but let’s skip that part now. Investing is a crucial and transparent notion.

Investing in money is like constructing a building. Without the base (savings) you can’t have the top floors (investments).

In the days of yore, people used to save in pots, bury them underground and mark the location so that they could remember and retrieve their savings. Other alternatives were piggy banks and envelopes for the same purpose. At times, they would even give it to trusted friends and relatives for safeguarding. People would either use the entire amount for constructing their house or would build portion by portion, like one room at a time.

Promote children to save money. They have to be given an amount and be told to use that amount for the month. No extra money would be provided whatsoever, whether they help in household chores or entertain some guests. This is crucial as that will teach them to save money. When they finally get accustomed to saving, they can be trained to invest money.

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Investing is nothing but sparing surplus wealth to generate more capital for future uses such as emergencies, unemployment periods and retirement.

Never ever start investing before you save! Yes, many a youngster actually commits this blunder!! First, build your foundation, and then build floor by floor. Put away money for things you require, and then invest for the future. Don’t reverse the process! Save for fundamental necessities and then invest the rest of the money.

Sounds like a slower method to make money?  Remember, slow and steady wins the race!!

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