Saving or investing?
It depends on several factors in your life. Mostly it depends on if you want instant (or almost instant) gratification, or if you are willing to wait for your gratification, in order to have and experience something more. It also depends on how old you are, what your income and expenses are, and what your life situation looks like.
Saving is when you put money aside to save for something that you want to purchase, often something tangible that increase your way of living, which changes your lifestyle to the better.
It could be a holiday, a new car, a new home etc. It could also be saving up for an emergency fund, which would cover unexpected costs. And…..it could be saving up for your pension.
Investing is all about taking a resource, in this case money, and make it grow. For example, in order for you to have more money in the future, you may invest your current money in stocks, bonds, mutual funds, shares and property.
Lifestyle or freedom?
When it comes to savings and investing, we always come down to what is important to you. Even though most people increase their income during their career, they still do not have enough money to save or invest. That is because, as their income increases, so does the expenses (Murphys law). In most cases they choose to increase their lifestyle.
Research show that approximately 1 % of the American people are financially free when retiring, 4% are rich enough so that they can afford their living, 10% have some savings set aside and 85% are poor. Even if this is the statistics only for one country, the situation is not so different in most industrial western countries.
So… what is important to you?
Let us state this – if you are willing to limit your current lifestyle expenses for a period of time in your life, you may achieve total financial freedom. Then you could have the lifestyle of the financially free. Would that be worth it to you?
1. Read this article about what to think about when saving. Read More
2. Read this article about what to consider when investing Read More
3. Read our articles about saving and investing for your retirement pension funds. Read More
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Do you currently have a secure job and don't save or invest for your future - read this article about the 40-40-40 system Read More