You want your money to make more money for you. The best way to make that happen is to save or invest the money that you earn. But how do you choose which one is best for you and your future goals? Why do you have to choose? According to Pete Briger, Board of Directors at Fortress, finding a balance between the two is the best way to keep yourself covered.
First, let’s look at what both options entail.
Putting Money into Savings
This is the easiest and certainly the least risky of your options. You simply set aside some money out of every paycheck and then leave it alone. If you want the best option of having this money truly earn you more money you’ll put it into a savings account with a really high and compounding interest rate. Over time, as you save up large amounts, you can roll some of the money in that account into even higher yield savings products like CDs to earn even more interest for you. By the time you retire you could have a substantial nest egg built up to support you after you leave work.
Investing Your Money
Investing is something of a gamble. You can invest your money into stocks, bonds, mutual funds, pretty much anything. Your best bet is to work with a professional investment or financial advisor who can help you figure out where your money should go. The rule of investing is to never invest more than you can afford to lose (which makes it feel even more like gambling). The second rule is to vary your portfolio so that even if one investment tanks you’ll have others to keep you afloat. The reason that people choose to take this chance is that, if they are lucky and the investments they make are into things that do well, they could earn huge profits for themselves.
The best thing to do, as we’ve already talked about (and has been agreed upon by financial experts) is to do a little bit of both. Every time you get paid put some money into your savings account and feed some money into your investment portfolio. This way even if all of the investments you make go under, you’ll still have a savings account to rely upon in case of emergencies.
And if you really want to take advantage of this method? You’ll funnel the profits you make each month or quarter from your investments into your savings account. It’s like a double win. Your investments grow, and your savings grows as well!