Just as one can invest time into a career or family, investments can also extend outward for financial utilization. The process of “Investing Money” entails a person, business, or government spending focused money toward the purchasing of an asset –or assets- with the intention and prospect of making a profit in the near or distant future. Monies made through investments can also increase using the value accrual of an asset, rather than through sheer gained profit.
Investments are initiated both with short-term and long-term aspirations. And as with all monetary movements, risks are involved, as are the possibilities of financial perks and snags; not all investments guarantee positive or satisfying returns.
Saving vs. Investing
A common misconception includes drawing parallels or exact similarities between saving and investing. Most consider saving and investing as one sole action, yet, this is completely false. Rather than being alike to a “T” and working as one, the two monetary actions work in tandem with each other. Consider saving and investing as two separate feet, one leading, or initiating the first step, and the other following.
Saving, the initial step, is a process of putting one’s money away in a secure place simply to save and avoid spending earnings. Saving is commonly practiced by most people through one’s home or bank –the latter being preferred- using opening a savings account.
Investing, on the other hand, and as the trailing step is a process of taking one’s savings and utilizing them toward the purchasing of assets with expected earnings or increased value potential in mind.
“When Should I Start Investing?” – The Time Is Now
Time, as it endlessly ticks away, is an investor’s greatest asset when accruing wealth. To sit on deciding whether or not to invest early is foolish, as investing early on proves quite profitable.
Don’t hesitate on starting to invest, it’s a waste of time and money otherwise. Most importantly, before one begins to invest, consider if a stable financial foundation already exists.
Personal Financial Stability
Investing requires financial stability, as investing is, in essence, adopting a long-term economic commitment. With this in mind, it is crucial to be financially secure, able, and responsible.
Monies allocated solely for investment purposes should be funds that will not be vital or readily accessible for many years; these are meant to not be touched. This knowledge is essential for planning to successfully avoid using long-term investment monies in circumstances where short-term funds are proving insufficient or nonexistent.
Savings and Investing Instruments
Investment aspirations involve both short-term and long-term approaches, each with various investing instruments typically used. See the instruments below:
- Savings Accounts
- Money Market Funds
- Certificate of Deposit (CD)
- Mutual Funds