What is better, Savings or Investing.
First let us understand the basics.
Savings
Putting money aside gradually, typically into a bank account. People generally save for any emergencies that might come up.
It states that individuals try to save more during an economic recession, which essentially leads to a fall in aggregate demand and hence in economic growth.
According to Keynes, however,
Saving is a private virtue but a public vice
Saving is a private virtue since every individual is induced to save owing to the instinctive fear of future uncertainty and insecurity and, therefore, as a precaution, he saves to safeguard against future contingencies.
Savings is a virtue at micro level since at micro level only single individual is doing saving which is not affecting our country GDP, but at the macro level, however, the demand for products and services can decrease if everyone starts conserving more money. Hence, GDP will fall. Due to which Whole system will get into the state of depression.
In this way, saving, which is beneficial at a personal level actually becomes disadvantageous at public and national level.
Investing
Using some of your money with the aim of helping to make it grow by buying assets that might increase in value, such as stocks, property or units of a mutual fund, etc.
Okay now let us understand why investing is better than savings.
For example, if the inflation rate is 10% and if an individual saves Rs.100/-. After one year, the amount of Rs.100/- saved becomes Rs.90/-. But instead of saving, if an individual had invested the amount of Rs.100/- then the value would have increased.
Excess liquidity for an individual can even create unnecessary small expenses.
For example, if an individual has a goal of retirement or any other goals, investing money is the only option that will grow the corpus. Saving money without investing won’t help.
When to invest money?
Now this question is asked thousands of times. To make it simple, if the investment is for a long tenure, there is no particular time, the investment must be done as early as possible. That’s a simple rule that each and every person needs to follow.
As we all know , if we work for money ,money also has to work for us.
