Most old fashioned people liked to save more money than blocking it at places. For them, saving money that’s earned can bring more value in future. However, that’s not a consistent view of individuals who are more money conscious and wait for additional income on the savings done. This is an intelligent way to double up your savings and reinvest. Investing will only take a part of your money and increase value for future use. For e.g. Invest into shares, mutual funds , property, life & health insurance etc.
Invest or Save? Choose value Propositions
All the new businessmen in the market are intrigued by technology and experiment with investments to build value propositions. The motive is to make more money and earn interest on the saved amount.
When you turn into an investor, money can be distributed amongst the profitable avenues for more returns and acquire financial assets in the following ways:
- Interest/dividends from savings or dividends on bonds
- Cash inflows from property/businesses
- Value Augment from portfolios, property and other financial assets
If your motivation is directed towards becoming rich, then simply invest your money. Do not also let your hard earned money be locked up in frivolous folios, rather choose smartly. This is the best way to earn and make money. Investing your money is a task and needs expertise.
It is for the investor to decide investments and convert money into value.
Listed below are some value propositions to remember:
Building an Emergency Fund
It’s highly advisable to create an emergency fund for contingencies. This is the sole way to avoid financial crunches on spot. The ideal rule is to have at least 3 months earnings saved into the emergency fund. This savings account stays untouched till the time the basics (rent, food, school fees and any other essentials) begin to bother. This is the account for your future financial security, when things go wrong.
Save as much Possible
After your emergency account is in place, it’s important to save at least 10-15% of your earnings every month. Plan your initial goals and set aside savings for the same. This could be house installments, an adhoc trip etc. After savings comes the next important step of investments.
Once the emergency fund is done, and partial savings too, it’s time to invest. Obviously, this can also mean buying shares, bonds, debentures, or at least some mutual funds, Investments are helpful to make more money with time. This is the power of compounding and appropriate interest rates. Even the lowest denomination can turn into millions if given enough time to grow.
The only time you shouldn’t save or invest is when there are more important things you need to focus your attention.
Read more: Top SIP Plans in Investment Funds