It is better to save your money or to invest it? There’s actually no right and wrong answer to the question, but there’s a better answer for different scenario.
First of all, both saving and investing are good ways to treat your wealth. Both attempts also permit you to use your money for other more important purposes in the near or distant future.
However, in order to know which brings more benefits than the other, we have to put them both into context. As both have their respective pros and cons, saving might be better than investing, or vice versa, depending on the situation.
For that reason, let’s wear our detective hat and put on the smoking pipe as we’re about to investigate when we should either invest or save our money.
Also Read: Investing vs Trading: What’s the Difference?
When Should I Invest My Money?
Simply put, investing is an attempt to make our wealth work by buying a security/commodity in hope of earning value. By looking at how it works, we can tell that it works well with long-term goals.
Accordingly, if you have extra money that you do not need at the moment, it will be wiser to invest it. By this, you will be able to gain more in the future, allowing you to use your money for other purposes.
What about Saving?
By oversimplifying how it works, saving is simply you keep your money for now and use it for later. Different from investing, saving allows you to reach short-term goals.
For instance, you need to afford something next month and, at the meantime, you have extra money you do not spend. Therefore, saving is definitely the better choice as you can immediately use it for your immediate goal.
Case Comparison
What if the case is similar? Should we save or should we invest? Okay, let’s put the context into travelling. Again, we have to examine the context thoroughly.
If you need to travel for an event, for example your kid’s graduation abroad four years from now on, it is better to invest. However, if you have to travel abroad next two months to attend an event, a seminar for instance, it is better to save. You understand the difference, right?
Also Read: Savings vs. Term Deposit: Which is More Beneficial
