July is assigned as National Savings Month in South Africa, according to a proclamation issued by the Savings Institute of South Africa. This specific month is all about practising sound financial habits, and this article will help you gain a thorough understanding of investing and saving in general.
An Introduction to Savings Goals
The goal of National Savings Month is to start educating consumers and encourage them to live within their means. According to the study’s findings, approximately 70% of South Africans cannot save, and among those who do, the majority do not begin saving at a young enough age. Based on the South African Savings Institute (SASI), the household savings rate was 1.7%, while the household debt rate was 75.4%. This demonstrates the importance of South African families developing the habit of saving and investing money as quickly as possible to avoid financial difficulties.
What is the Difference Between Savings and Investing?
So, what are the main distinctions between the two? Saving is the act of putting aside money that you will not use until you need it, whether for a one-time expense or a long-term financial goal. This money has been set aside for you so that you can access it immediately. Customers of banks and other financial institutions have access to a wide range of money-saving opportunities.
Investing is the purchase of investments such as stocks, bonds, mutual funds, or property investments with the expectation that their value will increase over time. These assets will increase in value over time, assisting you in meeting your long-term financial goals.
It’s All About Saving Money
We must attempt to save money whenever and wherever we can, even if it may appear to be more difficult to do so due to the uncertain times in which we find ourselves. Having a savings account is one way to achieve this goal. A savings account allows you to save your money in a safe place while also earning interest over time. The majority of accounts have a minimum balance requirement to work and begin saving money. When money is placed in a savings account, it is protected from loss and can thus be stored without concern.
Why Should You Save Money?
We all have goals and dreams that we want to achieve, but the path to get there may not appear to be the most direct. You can set money aside by saving so that you can use it later in life when you are ready to take the next step or when you need the money for an emergency. Starting to save for retirement early in life will help you lay a strong foundation for your life after you leave the workforce. Therefore when you are unable to work, you will not have to worry as much about not having a regular income.
To choose the best savings account for your needs, you will need to conduct some research and analysis on the various types of savings accounts that are now available. Depending on how frequently you will save money and the amount of interest you will earn.
What You Should Know About the Stock Exchange
Investing is the best effective way to grow your wealth without putting yourself under undue stress. As a result, your money can work for you while you focus on other aspects of your life. Investing involves putting money into stocks, mutual funds, or real estate and then leaving something there so that the value of the money can grow over time due to the accumulation of interest. Investing is not without risk, this means that your stocks or bond funds will potentially not produce a return greater than the amount you initially invested.
Before you can begin investing, you must first determine your investment objectives and the type of investment required to achieve those objectives. Shares, for example, are a type of loan to a company that allows it to expand or conduct research. Then you sell your shares at a premium cost and earn your returns, which are equal to your initial investment plus the share’s growth over time. A bond is a type of investment that represents money loaned to the entity that issued the bond. Unit trusts are capital pools formed by several shareholders who then decided to invest in a diverse range of assets to diversify risk.
Is It Better to Save or Invest?
Saving money or investing it could be the best option for you regarding achieving your long-term financial goals, but it all depends on your current financial situation. Saving money in a savings account is less risky than investing in the stock market, but it may not start producing the same long-term returns. Determine how much risk you are willing to take and how much money you can save each month. Cut costs wherever possible, educate yourself about investing, and seek advice from a financial consultant if you want to learn more.