Saving and investing are two forms that help assets to be protected and increased over time. To better understand these two forms, follow the following article with HVA.
What is saving? What is investing?
Understand the concept Saving and investment in macroeconomics help choose the right channel to invest money.
What is savings?
Saving is understood as the activity of managing money effectively to avoid wasting available money. Saving includes cutting down on spending, saving a certain amount of money from saved income. This helps users ensure money sources and create stability in personal finances.
Saving is an activity that requires long-term and consistent calculation. Through a period of persistence, a large amount of money can be saved. This amount of money can be used for many purposes such as: Using for future work, depositing in the bank to generate profit, investing in economic items. Thanks to the way of using the savings fund to earn profit, the family and personal funds can be increased.
What is investment?
Investment is understood as taking advantage of existing money and assets to generate profits and increase the value of personal and family assets in the future. Investment is currently known to have many diverse forms and investment channels.
Specifically, today, investors often invest in two basic forms: financial investment, personal investment and business investment. Each form of investment has its own unique features, but in general, the results still bring investors a lot of profit. Thanks to that, they accumulate a suitable amount of personal and family assets and money.
Through the concept of save and invest Users can combine the use of the money they have saved to invest. By taking advantage of these two investment channels, investors earn a stable amount of finance. Increase the amount of assets and money quickly and conveniently.
The difference between saving and investing
Below are some characteristics that help investors clearly distinguish between savings and investment, including:
Purpose
Review the purpose of the formsave and invest help understand more about the two forms and choose exactly which form you want to use.
- The purpose of saving is to protect and maintain safe assets to be used in emergencies or future plans. Seeing the main purpose is to preserve existing assets and money.
- The purpose of investing is quite different from saving, which is to invest a fixed amount of money. Investors earn profits and increase their initial capital through popular forms of investment. However, the safety of cash flow when investing will be lower than when saving.
Thanks to that, we can see the form of money pouring suitable for users. Currently, there are many forms of combining savings and investment to help investors take advantage of their savings time. Earn a relatively safe amount of profit and avoid many risks. The Difference Between Saving and Investing It is expressed through many factors, however, purpose is the easily recognizable factor between saving and investing.
Risk Level
Through the purpose of the two basic forms related to money and assets, it can be seen that the risk level of savings is lower. However, in terms of investment, when investing money, investors can earn more profits and the ability to increase money and assets is higher than savings. Compared to the level of risk that investors may encounter with the amount of money and assets increased during the savings period, it is equal. Therefore, in terms of risk level, both forms have their own distinct disadvantages.
Profitability
Similar to above, the profit generation of the two forms has big differences and disparities.
- With money savings, the earning assets are fixed for a certain period of time. Therefore, the profitability is low and the yield if deposited cannot surpass inflation.
- Investing compared to saving has a high return on investment, so investors can easily earn profits when investing. Here the profit is much higher than the interest rate received.
In the two forms above, each form has its own distinct highlights. Therefore, depending on the needs and financial situation, investors choose the appropriate channel. Choose for yourself how to save and invest money smart best after learning about these two forms.
Time
Time characteristics are also a factor in determining the appropriate investment channel for investors. Depending on each different investment channel, cash flow increases or decreases according to a fixed or flexible time frame.
For time savings are divided into short-term, medium-term depending on user needs. If saving money by depositing in the bank, the specific time is determined depending on the bank regulations.
For investment, the main source of money falls into the long-term investment range. The longer the time, the more sustainable the higher the interest rate. From there, the source of interest earned increases exponentially over time.
Investment and savings channels
Some channels save and invest The most popular and widely used today include:
Saving channels
Some reputable and quality savings channels that investors need to know include:
- Bank savings: Is a form of depositing money into private or state banks. From there, you will receive a specific amount of interest depending on the package the depositor chooses.
- Certificate of deposit: This is a flexible form of savings offered by financial institutions to depositors. Depositors can conveniently withdraw money before the due date without worrying about being fined or having their work interrupted when they need money urgently. In particular, the interest rate earned from this form is higher than that of regular bank deposits.
- Life insurance: This is a combination of savings and health protection. Thanks to this form of savings, depositors avoid many risks in life while still accumulating assets.
- Pension fund: This is a special form of savings for long-term retirement savings. With a high level of safety, it brings many retirement profits to the depositor. That helps the depositor earn a lot of profits in the right amount of time.
With a number of safe and effective savings forms, depositors can choose the appropriate investment channel. Thereby, they can earn satisfactory and safe profits. The relationship between saving and investment are always bound together. Therefore, investors are easily confused by these two forms of investment.
Investment channels
Some of the most popular investment channels today that investors need to know include:
- Stocks: This is a popular investment channel and is known by many people when participating in investment. Buy Types of stocks from companies listed on the stock exchanges. Thereby earning a profit equivalent to the amount of shares purchased.
- Bonds: Similar to stocks but issued as a form of capital pooling by the government or businesses. Thanks to that, the commitment to pay interest and profits is absolute.
- Real estate: This is a form of investment with high potential due to the special nature of the land. However, investors need a large amount of capital to invest because the cost of the product is very high.
- Gold: Is a traditional investment product that has been invested and stored for a long time. Due to its scarcity, gold accumulation has become an investment channel that brings in a lot of profit over a long period of time.
- Cryptocurrency: This is a new investment channel where investors rely on the profitability of investors buying Bitcoin, Ethereum, or other cryptocurrencies. Thereby earning profits through market fluctuations.
- Business: This is known as a traditional investment channel and is familiar to many investors. However, this is a high-risk investment channel and requires solid knowledge of business and management.
Through some forms of investment, we can see that the investment market is as vibrant as the savings market. investment and savings channel always support each other back and forth to help investors be flexible in using assets. In addition, we also need to equip investment knowledge to increase opportunities and limit risks in this field. Thereby promoting the economy to grow stronger and improve people's lives.
Through the article from home HVA talk about save and invest see the potential market of two investment channels. Regardless of which channel is chosen, investors can still easily increase the value of assets over time. Thanks to that, we can see the economic development potential of each family.
