An investment against saving!

What is an Investment?

An investment, on the other hand of saving is solely structured for wealth creation. This is money that you put aside with the understanding that it will not be needed for many years, the exact number of which differs from one individual to the next.

Investments involve greater risk, but, investments must also yield much greater returns when left alone long enough to ride out the turbulence of the stock market. When you're investing, you give your assets the potential to grow over time. You typically reinvest your interest, dividends, and capital gains earned.

Often you are prepared to take a little more risk with investment money than you are with your savings. With the opportunity for growing your money comes the risk that your account value may decrease. If you have many years before you need the money to reach a goal, such as your child's college education or your retirement, you may have time to recover from small decreases in value.

When you "invest," you have a greater chance of losing your money than when you "save." Unlike insured products, the money that you invest in securities, mutual funds, and other similar investments is not risk free. You could lose your "principal," which is the amount you've invested. That’s true even if you purchase your investments through a bank. But when you invest, you also have the opportunity to earn more money than when you save.  There is always a tradeoff between the higher risk of investing and the potential for greater rewards.

When you invest, you are buying an asset that you expect to grow in value. Since the value may fluctuate, it’s best to invest money that you probably won’t need in the near future. You will want to be able to sell when the market conditions are favorable, not on short notice.

Investment choices range between

§  Individual securities — such as stocks and bonds

§  Pooled investment products — such as mutual funds and exchange-traded funds

§  Estate planning and real estate

§  Retirement plans

§  Rare investments like art pieces and precious metals

You will need to find investments that fit your goals, time horizon, and risk profile. If the investments you choose make you nervous or uncertain about your future, you may be in an investment profile that’s too aggressive for your risk tolerance.

Getting the most from your money means understanding the difference between saving and investing — and how to use both. Saving alone may not provide the opportunity to grow your money at a sufficient rate. Yet, relying solely on investing could leave you without easy access to enough money in an emergency.

Understanding the difference between saving and investing helps you put your money to work toward your goals and then ensuring that goals are not just dreams but that they become achievable