Why Investing is Better than Saving

Here is the truth: Investing is better than saving for your money. It’s simply because, investments grow your money better. However, it’s not as simple as that. There are a lot of factors that need to be examined and understood for you to be entirely convinced of this comparison.

1. Money Loses Value Over Time

One main reason why investments are infinitely better is because of money’s natural feature of devaluing. Notice that what your 1$ can buy ten years ago become significantly smaller compared to know. This is because money loses value as time passes by. So simply put, if you simply save up money, put it aside and rely on safekeeping, it will still be there after 10 or 20 years but it’s purchasing power is significantly lower.

2. Money Works For You

Have you ever heard of the phrase, “Make your money work for you”? Well, it’s the case with investing. When you invest, you make your money work for you because it collects interest and profit over time. When you invest, you buy something that you believe will appreciate in value over time. This appreciation of value means that your money has grown by the time you liquify it. In short, investment is putting in money and sitting back while time increases its value.

3. Money Business is Risky

Well, it’s not all negative for saving up. Investment battles the effects of inflation. When your money loses value, the way to beat it is to grow the money’s value faster than inflation. However, all investments have inherent risk which you must take. So growing your money takes risk. After all, it can’t be as good as putting aside money and watching it grow. Still these risks can be taken on carefully, you just have to research and know what risks you can take. With saving up, you take way less risk but also have less chances of growing it.

4. Money’s Growth Depends on Time Put Away

A quality of investing and saving that make them advantageous or disadvantageous depending on your needs, is liquidity. Naturally, saving up is more liquid but offers less growth. While it does have returns from interests, it’s not as potent as investments. Meanwhile, investments grow better the longer you put it away. So it’s smart to have both so you have money for emergency situations and money for the future.

Investing is obviously better than saving but only if it’s for making more money and for ensuring your future. Saving up is also good for living your daily life.