Should You Be Investing
There are many people who wonder whether they should invest or save their money. The answer to this question fully depends on what are your financial goals and what are your current financial circumstances. In fact, investing can grow your savings; however, there are a few considerations you need to take into account when deciding whether investing is right for you at this time.
Please take a look at this quick guide which should be very helpful to you in deciding whether long term investing or short term savings is the better choice for you:
What Is The Difference Between The Two?
A savings account is simply a way of setting aside a little bit of money on a regular basis. It’s common to save towards something in particular, such as a family holiday, a home deposit, a car, or even as a contingency fund in case of emergencies. There are many tools that you may use to save money, such as bank accounts or building societies. In contrast to this, investing is when you put some of your financial resources to work in an attempt to grow them. Buying assets that will increase in value over time so you can see a return on your investment is something you do with things like stocks, real estate, or alternative investments like woodland investment shows that people are also using this new option.
Fund For Emergency Situations
There is really no reason why everyone shouldn’t have an emergency savings fund. It is a good idea for you to try to set aside some of your living expenses in an instant access account at least three months in advance. The essential outgoings like food, rent, mortgage, school fees, and any other essential outgoings should be included in your budget. It is your responsibility as a homeowner to ensure that you are financially secure if anything goes wrong at any time.
Keep Saving If You Wish
If you have reached your goal of having an emergency fund, you should continue to save and build on your emergency fund. Ideally, you should aim to save a minimum of ten percent of your income per month. Save as much money as you can even if it’s a very small amount if you cannot save this amount. Setting yourself a goal is a great way to get moving towards achieving what you want and then working towards getting the funding in order to accomplish that goal. However, you should not use the emergency fund for things like this.
The time has come when you might want to think about investing your savings rather than saving for a wedding, a house, or a car. It is important to realize that when you invest money, you are hoping to get a return.
When Is The Wrong Time To Save?
To put it simply, you need to save whenever possible unless you have no other choice but to spend your money. The money you earn should be spent on something that is important to you. Do not save money for something that is not important to you. Some examples of this would be it’s important to manage your debts. Paying off your debts should be a priority before you start trying to save money. The situation is different if you have a payment plan in place. In this case, you may have the ability to save an emergency fund.
Is Now A Good Time To Invest?
Your own goals will dictate the answer to this question.
- Goals you have for the next five years – Your short-term plans. Normally, you will use a bank account for your savings account.
- A five- to ten-year plan is a good medium-term goal. If you do not want to risk your money, then cash deposits would be your best bet. If you wish to risk your money, then investing your money could be a much better option. In the case that you want to save for a large purchase such as a house, the risk may not be worth it.
- Longer-term goals – These are typically investments that you will hold on to after retirement or after waiting ten years for the funds to be released. You need not take the money out for at least ten years if you’re looking to invest. Usually, it’s longer if you need to take the money out for a long time.
You should always make sure you know what you’re doing when you invest and maybe even speak to an advisor if you’re unsure. Never forget that investments are never a guarantee.
What other tips would you like to share about saving vs investing? If you have any, please feel free to share them in the comments section below.
You May Also Enjoy
Commonhold White Paper – Thoughts from the Industry
Greenpeace Ruling Exposes UK Government Policy
Rightmove commentary on mortgage market + weekly tracker
Government plans to ban new leasehold flats
Bank of England Money and Credit Report – January 2025
