Saving & Investing
(Formula for Wealth Creation & Financial Independence)
Money is important for every human being, it is precious & humans are working for earning the money for their needs, financial goals, etc., they know the important concept of "Saving money" but they often overlook the value of Investing. Saving money refers to putting aside funds that are not needed right now (i.e. Savings equals income minus expenses.) Saving money is the initial step but sound investment decisions are also very important. Both saving and investment are financial behavior.
In order to build wealth and achieve financial independence, let's attempt to grasp "Why saving and continuing to invest is necessary?"
The primary function of money is as a medium of exchange. That's why money has value. In my opinion, Money is a
terrific buddy once you put it to work for you rather than you are not working for money (Investing).
Money is more valuable in human life, thus I believe saving and investing as much as you can be
helping you and helping the country's economy.
There are five basic ways to invest
money that it works for you or yields a higher return:
- Put money in the savings account.
- Buying
collectibles.
- Buying
apartments or a house or land
- Buying
bonds.
- Buying
stocks.
Saving
accounts, Money market funds, Treasury Bills, and Certificates of deposit (CDS): all
are known as short-term investments. They pay you a lower interest rate. ( The interest rate is the rate at which interest is charged or granted on any money deposited, lent, or borrowed in each period.)
The first
purpose of saving and investing is to keep ahead of inflation i.e increase in the cost of goods and services, it's less the value of money & your purchasing power. The problem with
leaving money in a bank or savings and loan, the money is safe in the short
run because it’s insured against loss and inflation but in long run, it's likely
to lose ground against taxes and inflation.
Saving accounts:
are excellent ways to places to park money so you can get it quickly whenever you need to
pay bills. They are a great place to store cash until you have got a big enough
pile to invest elsewhere. But over long periods of time, they won't do you much
good.
Buying stocks: buying a stock of the company, i.e. stock ownership. The secret to
successful investing is finding successful companies' stocks.
Finding successful businesses is challenging but if you do your own research or homework you can do them. You begin by adopting the perspective of a stock picker, who views everything as a possible investment, there are a few more things you should know about the company:
v
Is the company spending its money properly or
wasting it?
v
How much money does it owes to banks?
v
How quickly are sales increasing?
v
How much money is earned in the past year and
how much it can expect to earn in the future?
v
The Stock is selling at a fair price, a bargain
price, or too high a price.
v
The Company is paying a dividend and if so how
much of a dividend and how often it has increased.
Investing is not an exact science therefore no matter how
hard you study the numbers and how much you learn about a company's past
performance you can never be sure about its future performance. What will
happen to narrow is always a guess. Being an investor, it is your responsibility to avoid making irrational decisions.
It is your responsibility to pick stocks and not overpay for
them rather than to continuously monitor any positive or negative development at the company's business you want to pick. You can use your knowledge to keep the risks to a minimum.
Saving money & investing money is a regular practice that should be continued for, wealth creation and financial independence.
Have fun saving and investing. Best wishes.
🙋🙋🙋🙋🙋🙋🙋💰💰💰💰💰🤑🤑
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on Investment or recommend buying and selling any stock
