Everyone knows that it’s best to have something put away for a rainy day. However despite this knowledge, many persons don’t have an emergency fund. They might try to save but are unable to do so consistently.
As a result they have nothing much to fall back on when faced with unexpected costs. Others might start to save but it takes years for them to see any real increase in their capital.
What if making an investment could ease your fears of not having enough funds should the need arise?
Investment refers to the purchase of stocks, real estate or bonds. They all are valuable assets but their value does not remain constant. This means the amount of money that you can make can decrease or increase. There are many different types of investment options.
Stocks – This type of investment involves purchasing part ownership in a company. Therefore if the company does well and has significant profit then you will also benefit.
Bonds- This type of investment refers to lending your funds to an organization or to the government in return for the interest they pay you over a specified period of time.
Real Estate- This refers to purchasing land or existing buildings and may be used for rental agreements with third parties.
Unit Trusts- This is a collective investment scheme where the money from several investors are pooled together and used to purchase various types of assets. The unit trust is managed by a financial organization which trades the securities on behalf of the unit holders and returns profits minus fees to the unit trust holders.
Risks vs Benefits
What is the main difference between saving and investing?
Well it’s really simple when you invest there is a risk that you will lose some money. However there is also a greater likelihood that you will also make more money.
Persons who have their money just sitting in a bank account are often not earning anything as a result of inflation. In fact in some cases, the rate of inflation is greater than the interest rate on deposits which results in less spending power for consumers.
Investing despite the risk of loss does hold out a more projected long term way of increasing your capital.
That is not to say that you shouldn’t continue to save but finding money to invest can definitely add to your financial portfolio and allow you a little more for that rainy day.
So what’s your take on the issue? Do you invest?
Let me hear from you.
Teri Ann Renee Paisley
Gleaner online writer