For a better and safer future, savings and investing are essential. Yes, the future is totally unpredictable, but planning is needed. Based on your current financial status, it is also vital to know which one is suitable for you. The perfect timing is also crucial. Here get an idea about how to plan your saving and investment.
What is Saving?
Saving money implies the process where you put hard, cold cash aside and park it in an exceedingly safe manner. It also allows you to access those cash when you need them. A little delay is acceptable, but you can use the amount of cash you are saving at any time you want.
Benefits and Drawbacks of Savings
It is essential to know the pros and cons of saving now.
Benefits of Savings
- The amount in your account will never decrease.
- In case you are saving the proper amount, you can safely reach your goal on a specific timeline.
Drawbacks of Savings
- Though the money amount won’t decrease, the purchasing power can be less due to inflation.
- In order to reach the same goal, you need to save more money than investments with higher returns.
What is Investing?
Investing money is basically the process in which you use your money in order to buy an asset that will give you a higher return over time—choosing a perfect asset, which has an excellent probability of creating an acceptable and safe return over a specific time period. You can also use Cryptocurrencies here. To know more about the Crypto market, you can visit Immediate Edge.
Benefits and Drawbacks of Investing
Let’s get to know about the plus and minus points of investing.
Benefits of Investing
- Able to provide higher returns than savings.
- You do not need much money as it offers higher returns for your goals.
Drawbacks of Investing
- There is a chance of decreasing value.
- If right before reaching your goal, the value decreases, you have to delay your goal.
How to Plan Savings and Investing in 2021
The most difficult is to decide whether you should save or you should invest. Which one is for you? Here is the answer.
#1 Save for Short Term Goals
In case you need a certain amount of money on a particular date, it will be best to save that money rather than investing it. As there is no chance of decreasing the liquid asset or cash in saving, it is safer. While investing may decrease the value of the asset on that specific date.
#2 Invest for Long Term Goals
Investing offers the opportunity of getting higher returns if you have plenty of time in your hand, and also you can postpone your set goal. Here, the ability to delay your goal is the key. In case the investments are at a down level when you have planned to achieve the goal, delay it by a couple of years or more. And it can result in much higher returns than your expectations. Investing in Bitcoin or other Cryptocurrencies will be a good option.
#3 Go for Both
There is another option open for you where you can opt for both saving and investing. You can save a certain amount that you absolutely need. You also can make the investment with the rest of the money that you can afford to delay. You also can invest in the beginning in order to achieve a long term goal and start saving when you are getting close to it. This way, you will not face a sudden drop in your financial status if your investment does not perform well.
In the end, only you are the one who can decide which one will be better, saving, or investing. On the basis of your goal, you can determine whether saving will be best for you or investing. In order to choose between these two, the most important thing is to understand and plan your goal correctly.
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