Savings is great but who holds the savings matters.
Savings is the process of setting aside a portion of current income for future use, or the flow of resources accumulated in this way over a given period of time. Saving may take the form of increases in bank deposits, purchases of securities, or increased cash holdings. The extent to which individuals save is affected by their preferences for future over present consumption, their expectations of future income, and to some extent by the rate of interest.
The importance of saving money is rarely disputed. Savings is one of the most basic (and most repeated) bits of financial advice out there. Despite the importance of saving money, many of us aren’t following through on that tip. When it comes to doing the right thing financially, just knowing you should save isn’t enough.
Keeping your savings in a Ziplock baggy under your mattress and not preparing yourself for anything beyond the apocalypse? Think again. And even then, I doubt your local merchant will be around anyway to accept your cash for a loaf of bread because their credit card processing machine was destroyed in the nuclear blast that annihilated most of humanity. Come on, now. Let’s be real.
Truth be told, one of the best ways to take charge of your finances in today’s uncertain economy is to accumulate a healthy savings account. Nobody wants to feel the stress of knowing that they are only a paycheck or two away from financial disaster because they lack money to fall back on when “stuff happens.” Specific examples include job loss, disability, a car breakdown, a sick child or pet, and other types of financial emergencies. Saving provides a financial “backstop” for life’s uncertainties and increases feelings of security and peace of mind. Once an adequate emergency fund is established, savings can also provide the “seed money” for higher-yielding investments such as stocks, bonds, and mutual funds.If you don't have an emergency fund, you may end up having to take out a short-term, high interest loan or carry a balance on a credit card at a high interest rate.
However, the act of saving money won’t, in and of itself, make anyone rich. Ordering water instead of soda or beer at restaurants might save you a few hundred dollars over the course of a year. But let’s face it – a few hundred bucks isn’t life-changing money. If ordering water were the easy button to achieving early retirement, we’d all be retired and sipping margaritas in paradise. Wealth is a direct byproduct of what we do with that money. This asks the question – “How exactly can I retain wealth?”
You've heard it before, now believe it: INVESTING
You can start by investing! Investing is putting the money you save to work, increasing your wealth. An investment is anything you acquire for future income or benefit. Investments increase by generating income (interest or dividends) or by growing (appreciating) in value. Income earned from your investments and any appreciation in the value of your investments increase your wealth.
Once you have a good savings foundation, you may want to diversify your assets among different types of investments. Diversification can help smooth out potential ups and downs of your investment returns. Investing is not a get-rich-quick scheme. Smart investors take a long-term view, putting money into investments regularly and keeping it invested for five, 10, 15, 20 or more years. Little wonder businesses like Piggyvest and the likes of Cowrywise are flourishing.
Here are some few ways for investing your money
Bonds—A bond is a fixed-income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments.
Stocks—A stock (also known as equity) is a security that represents the ownership of a fraction of a corporation. This entitles the owner of the stock to a proportion of the corporation's assets and profits equal to how much stock they own.
Mutual Funds—A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities.
Yours in hustle,