Saving and investing are both important, but they’re not the same thing. While both can help one achieve a more comfortable financial future, one needs to know the differences and when it’s best to save and when it’s best to invest.
Both have different purposes and play different roles in a personal financial strategy. The biggest difference between saving and investing is the risk versus the reward. Saving typically allows one to earn a lower return but with virtually no risk. In contrast, investing allows one the potential to earn a higher return, without taking risk of loss in order to do so.
Saving is the act of putting away money for a future expense or need. When you choose to save money, you want to have the cash available relatively quick, perhaps to use immediately. However, saving can be used for long-term goals as well, especially when you want to be sure you have the money at the right time in the future. Savers typically deposit money in a low-risk asset management plan such as a bank account that aligns with the minimum balance requirement best suiting them.
Investing is similar to saving in that you’re putting away money for the future, but you’re looking to achieve a higher return in exchange for taking on more risk. Typical investments include shares, bonds, mutual funds and or Exchange Tradable Funds (ETFs). The scope of this article however, is investing in shares.
Investors can step out of their comfort zones to realise significant gains by investing in the shares. While market performance is often volatile in the short term, investing on the shares in the long term however, generates higher returns than keeping one’s savings under the mattress. The general principle is very simple; one should buy a share when the price is low and sell the security when the price is high.
Stock markets are huge auction houses. Every day, investors are buying and selling their shares. This makes securities a liquid investment. When investors want to exit an investment, it is quick and easy to find a buyer. Other assets are much more difficult to sell. If you invested in an investment property, it could take time to find a buyer and get your money out. With securities, investors can find a buyer the very day. C-TRADE comes handy for investors who wish to exit as they are given the option of exiting whenever they want to.
Given that the price of shares fluctuates up and down depending on the performance of the companies as well as other developments in the economy there is a real opportunity for investors to make a profit in the sale of securities in the secondary market. C-TRADE further enables investors to keep in touch with their investments remotely so they can make quick decisions in certain market conditions which needs to be acted on urgently. The general principle is very simple; one should buy a share when the price is low and sell the shares when the price is high.
Investors can benefit from income in the form of a dividend. While not all shares offer dividends, those that do deliver annual payments to investors. These payments arrive even if the shares have lost value and represent income on top of any profits that come from eventually selling the shares. Investors can hold on to their shares whilst benefiting from dividends.
Buying shares means taking on an ownership stake in the company an investor purchases equity in. This means that investing on the capital market also brings benefits that are part of being one of a business’s owners. Shareholders vote on corporate board members and certain business decisions. They also receive annual reports to learn more about the company.
In conclusion dear reader, reflect on this truth; the maverick billionaires of the world are investors in capital markets. Whether they are high risk takers such as George Soros or the conservative type like Warren Buffet, the one thing they have in common is their appetite for investing in the securities market. When will you start trading? C-TRADE is at your fingertips.