Do you think it is more profitable to save or invest? There are still many misperceptions in the community about these two things. Although saving and investing is done by reducing expenditure, there are differences between saving and investing. Saving means you set aside a fraction of the income to be saved, while investing means you invest money; usually for the long term; to make money back from the money invested. Then, is it more profitable to save or invest?
Saving versus Investment
Come on, see the description of the strengths and weaknesses of the following savings and investments.
Advantages of saving
Saving has several advantages over investment.
1. Access fast withdrawals.
For those of you who manage a business, savings may be very beneficial for you. Savings can be withdrawn at any time so that if at any time you need funds, savings will be very helpful.
2. There is no risk of lost money
Unlike investment, saving has no risk of lost money, unless you are exposed to fraud.
Investment has advantages over saving.
1. Risk of being wasteful
For those of you who make an investment, you are less likely to act wastefully because investment usually has a certain period of time, in contrast to savings that you can withdraw and use at any time.
2. Getting a return
Investment allows you to make a profit from the money you invest. For those who are able to have good analysis, investment will be very profitable for you.
3. Not affected by inflation
Unlike saving, investment is not eroded by inflation.
Lack of saving
Apart from its advantages, saving also has weaknesses, namely, as follows:
1. Administrative costs
Saving at the bank will be subject to administrative fees every month, thereby reducing the amount of money saved.
Savings do generate interest, but the interest earned will not be proportional to the value of inflation, so the value of money will decrease as well.
3. Interest earned is not significant
Compared to investment, the interest earned from saving is smaller, so it won’t significantly increase your money.
Lack of Investment
Apart from its advantages, investment also has drawbacks, namely as follows:
Investment may be able to generate significant profits, but investment has a high risk where you can not get a profit at all and lose the money you invest.
Property investment requires no small amount of funds
Investment in the form of property requires not a small amount, so you will only be able to do it if you have sufficient funds.
That’s the advantages and disadvantages of saving and investing. So, is it more profitable to save or invest? The answer depends on your needs. If your priority is to the profits generated, investment is the right choice. However, if your priority is security of savings is the right choice for you.