Ever since we were kids we were told that saving money should be a priority. Work for want you want, and save. And although saving money is a great habit, investing your hard earned money is an even better one. Investing is essential to good money management because it plays a big role in your financial security. Not only can you end up with more money in the bank, you end up with another income stream.
Saving Money vs. Investing. What’s the difference?
While they are related, saving money and investing are entirely different things. They have different purposes and play different roles in your financial strategy. The one thing they do have in common is how important they both are in securing our financial future.
Putting money aside gradually, typically into a bank account where you can get to it when you need it. People usually save toward a short-term goal like planning a vacation, putting a deposit on a house, or preparing for any emergencies that might come up. While the money you save may earn interest, rates tend to be very low. The trade-off is that your money is accessible.
Taking some of your money with the intention of making it grow, by buying assets that you think will increase in value, such as stocks, property, or shares in a mutual fund.
Are you ready to invest?
You may want to consider starting your investment strategy after you do the following:
Build your emergency savings.
Savings should come first. Before investing, try to make sure you have an emergency fund you can use to cover expenses for unforeseen events like if your car needs new tires, the pipes in your house burst during a deep freeze, etc.
Pay off high-interest debt.
By paying off high-interest debt in full, you’ll reduce the total amount you owe faster, and free up money to put toward savings or investing.
Max out your 401(k) and IRA.
If you’re offered a 401(k) or other employer-sponsored retirement plan and your company kicks in matching contributions, you should take full advantage of those first. That’s an automatic 100% return on your investment. If your long-term goals include a comfortable retirement and you’re already contributing the maximum amount to your retirement accounts, it may be an appropriate time to explore additional investment types.
Investing in Real Estate:
Investing can help you reach big financial goals. If your investment is earning a higher rate of return than a savings account, you will be earning more money both in the long term.
Property investments have proven to be successful for the richest men and women around the world. The wealthy focus on investing in high quality, top tier commercial assets. When you purchase a property and it increases in value over time, you get to reap the rewards.
If you have any questions about getting started in investing in real estate, or if you want to sign up for our online investment platform, we would love to chat with you! Here at DiversyFund, we are striving to fundamentally change the real estate investment industry for small and medium-sized projects across North America. We are determined to help everyone build wealth through online real estate investing and believe that saving money is good, but investing is SO much better.
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