216) Differences between Savings and Investments
What is Savings?
We save or store money so that can be used in the future. The amount is "preserved" and little or no chance of losing its nominal value. The money is normally saved in a bank.
More suitable for shorter term.
Returns are lower.
Risks are lower.
Returns: Interest.
Liquidity: Higher.
Purpose: Living expenses, buy small items, short holiday.
Main factor: liquidity & flexibility.
Examples: Savings Account, Fixed Deposits Account.
What is Investment?
We invest into an asset and hope that the value will increase and/or generate income. They value can increase or decrease, depending on demand and supply. We expect some risks in investments. Money is converted into another asset to generate higher value or some income.
More suitable for longer term.
Returns are higher
Risks are higher
Returns: Capital Gain and Income.
Liquidity: Lower or very low.
Purpose: Retirement, children education, other financial goals, buy large items.
Main Factor: time and discipline.
Examples: Shares, property, unit trusts, business.
Always remember the saying,
High returns comes from high risk.
Read more about 4S of Investments from this link
http://highlevelrules.blogspot.com/2017/06/what-investors-want-in-their.html
No comments:
Post a Comment