Difference between Savings and Investments
On Various forums you may have seen people talking about investing in various assets like commodities, foreign stocks, Sector funds etc. but 99.99% of People need to understand that they can become financially independent by doing simple basics in disciplined manner over a period of time rather than being worried too much about things which they don’t know. You may always learn these over a period of time once you have started implementing basics in disciplined manner.
For e.g. In Cricket terminology –Someone like Rahul Dravid became a great batsman by doing basics over and over for 25 years. I am not sure whether he knew reverse sweep or dil-scoop at the start of his career. He learnt it only and only when he has perfected basics over 20++ years.
I will talk about simple basics on how to achieve financial independence during coming weeks. All this knowledge has been shared by financial experts over last many years and people like us will keep republishing the same in our own words.
Let’s talk about simple basics here again.
Recently I was asked a simple question on what is Savings and what is Investments?
Saving is the process of putting money aside for later use and not spending it.
Investing is what you do with that money to make it grow so that you can meet your financial goals.
You can put your savings in a bank account and earn 3-4% return PA whereas Inflation is @6-7% PA earning negative net return.
Investing involves committing money into an investment like Mutual fund in the hope of making a financial gain.
