Thursday, January 23, 2014

Saving or investment; Which you prefer?

At the end of the month, you still have cash. The boss give you the bonus after you finish some project or your business get order from the customer. They celebrate it at the cafe and restaurant but they still have money. They do not know spend the money. If we find this case, we can save or invest the money. We may be confused to put money whether in saving or investment.
Saving your money does not increase the number of money if you save in cash box or piggy bank, however, you can withdrawn the money anytime. You do not hate to go to the bank office or ATM. The cash box also does not charge you administration fee.
If you put money in investing, you can make more money. Some stock has return around 17% in good economic. However, most stock has decline. We do not know when the stock rise again. The investment is also high risk. We can loss all money in the investment.
Either you invest your money or save your money is your decision but you should consider some aspects:
1. The financial goal
Do you have financial goal for short term? If you have plan to buy a notebook, you are better to save your money at cash box. You can withdraw the money anytime. If you have still other money, you can invest it for long term goal. For example: you want to buy a house. You are better to invest your money. Buying a house is long term goal for most people due its price is so high. Rarely, we find people pay the house cash.
2. Budget
It is not difficult when we have budget our money. Rarely we find the excess cash at the end of the month. See the proportion of the investment that you should spend. Share the excess money to either saving or investment. 
3. Emergency fund
Only one third US people has emergency fund. If you have no emergency fund, you can save your money as emergency fund. It helps you when you need money immediately. You have better to have emergency fund that six times your monthly expenses. If you have provide emergency fund, you can invest your money.
Both saving and investment is a good habit and can raise your wealth. You are better spend your money at saving or investing rather than unnecessary things.

No comments:

Post a Comment