IS IT ENOUGH TO JUST SAVE MONEY?

In a day and age where income is hard to earn, is it realistic to speak of saving? The answer is a resounding YES! We will now consider why it is not only realistic but also beneficial to save for the proverbial “rainy day”. We will then take it a step further to something more than just savings. 

Saving up or setting aside money from our income, be it daily, weekly or monthly is a culture that is gradually phasing out. We live in a society that encourages instant gratification of desires. “If you want it, get it!” It is therefore not surprising when you sometimes walk into a shop with the plan of buying one outfit, and you end up coming out with bags of items, not necessarily because you need them, but because they are in vogue, or eye-catching.

Whether we accept it or not, the Economy is very unstable.  We just need to set aside a fixed amount of money from what we earn, even if small. The benefits of doing so are many, but we will only mention a few.

1.      It helps us achieve short-term goals. This is so true because when we amass our “treasures”, check it in a short period of time and you may be surprised at how far you have come. Before long, that dream apartment, car, certificate etc, might just be ours.

2.      It helps prepare us for unexpected expenses and emergencies.

3.      It gives us a sense of security and assurance.

4.      Fulfillment - When we save for a purpose and that purpose is achieved, it gives us that ‘pat on the back’ feeling.

We now move on to something even more beneficial than simply saving - Investments.

While saving is putting money aside bit by bit to make a lump, investment is saving with the intention of gaining profitable returns such as interest, income or appreciation in value. Investment is a wealth building process. It is ‘growing’ your money.

Interestingly, contrary to what many may think, investment is not limited to the rich. Anyone can invest according to their means and circumstances. Investments are particularly beneficial for long term goals such as retirement or a child’s education.

Making the choice between saving and investing largely depends on how much of a risk-taker an individual is.

First individual will make the money and save, saying to himself “I have done well.” He would not want to mingle with anything or anyone who tells him he can do more than just saving; he would rather not risk his hard-earned money. In contrast, second individual will make the money and venture on what he perceives will produce more. He is willing to take the risk, he trusts people, he makes mistakes, he doesn’t let fear hold him back, and he/she faces the consequences and grows in the process.

BENEFITS OF INVESTMENT

1.       Investment helps a prudent investor to earn more, giving them the benefits of enjoying a higher standard of living for roughly the same amount of work.

2.       People can use well managed investment plans as a prudent means of saving and growing money needed in the future. For example, they might set aside money they have earned in long-term investments to cover anticipated major future expenses, such as their children’s higher educational costs or their own funeral. Investors can also use the proceeds of their long term investments to build a nest egg to help make their eventual retirement more comfortable.

3.       What differentiates investment from speculation or gambling is that the investor can reasonably anticipate making a profit on their investment due to their advance research and prudent selection of an appropriate investment vehicle. Basically, they are not out placing bets in the markets, but they are instead expecting a gain to result from their research and investment activities.

4.       Of course, having that key investor mindset certainly does not guarantee that their investments will always appreciate in value, since they could still lose. Nevertheless, having an investor’s mindset does help individuals to direct their interests, and hence their capital, toward making less risky investment choices, even if they ultimately have to accept lower returns. The advantage of this is that they are more likely to preserve their investment capital over the long run.

 Whatever your choice may be, saving or investing money requires self discipline and hard work. Like getting physically fit, getting financially fit takes hard work and the ability to say "no" to temptation. “Everyone wants the 6-pack abs - but are they willing to do the work?" says Michael Silver, CFP professional and partner at Baron Silver Stevens Financial Advisors in Boca Raton, Florida. "Everyone wants to retire with a lot of money at some point, but are they willing to save and be disciplined with their spending in order to do that?" Start early, save hard and let compound interest get to work.

So what will it be for you? Savings or investments?

At Capitalfield Asset Management Company Ltd, we have instruments designed to help you invest with high returns while promising security and a stress-free environment. For more information and enquiries please visit our Group website www.capitalfieldinvestments.com and check out the array of services we offer through our various subsidiaries, or call us on 01-4547432. We would be glad to answer all your questions.

We wish you a beautiful week!