Are you saving or investing?
Welcome to 2021! Let’s kickstart this year with a basic fundamental question - Are you saving your money, or are you investing it?
This may be a very simple question to most of you who know the difference, but for those who don’t, this is absolutely essential and forms the basis of what we will be discussing in upcoming posts.
Isn’t saving the same as investing, you ask?
No. It isn’t.
When we speak about saving, we mean keeping some money aside for a future purchase. The key here is “keeping money aside”. This is just to create a fund for a future purchase transaction. The money just sits in your drawer or bank account and earns zero to little interest.
Investing, on the other hand, means purchasing assets (or instruments) which will make the money multiply. This includes things like stocks, bonds, mutual funds etc.
Saving money will give you a safety net and a disciplined life, but investing is what will make you rich. Investing is what will make your money work for you.
A lot of people will have this question - does a Fixed Deposit fall under Saving or Investment? Technically, since the money is earning interest, it falls under investment. But given how low the interest is, an FD is nothing but a mode to SAVE money. We will talk about why a Fixed Deposit is not the best way to multiply money, in the upcoming newsletters.
For now, since you guys may still be hung over, I won’t keep this too technical.
Watch out for the upcoming newsletters on investment and saving instruments in the coming days! Subscribe to my newsletter to get more tips on Investing and wealth management.