If you wage an internal battle between saving and investing and cannot decide which way to turn, learning about some of the important similarities and differences between them is a good place to start.
What you save is what remains of your earnings, once you have spent part of it. It’s essential to your financial well-being and requires almost no prior planning. Most salaried employees have their income credited directly to their bank’s saving account.
What you invest, on the other hand, requires conscious planning and is undertaken with the objective to build both short-term and long-term wealth. The options available to you are plenty, though the common practice is to think of investments right before filing your income tax returns.
How about investing beforehand and making the most of the investment cycle? Once you have saved enough in your account for emergencies, you can begin investing your money. Saving enough translates to having enough money to pay for your living expenses and an emergency corpus for a big event or expense. You should be comfortable in the knowledge while making an investment, that it will not eat into your regular financial obligations.
The interest you earn on your savings account is generally much lower than what you would earn if you invested that amount in instruments like Mutual Funds, Stocks or even Fixed Deposits.
Stocks though are risky investments as they are dependent on market fluctuations. You should therefore remember to spread your risk while investing. Mutual Funds help you there as you can diversify your portfolio with ease. Mutual Funds or MFs are spread across different stocks so that if one fails, the other can cushion the fall and mitigate the risk on your net returns.
Investing helps you grow your money over time. If you are consistent, your interest earned can slowly overshadow your own contribution to a particular fund. As a long-term strategy, investing requires your patience for building lasting wealth.
So if you are feeling convinced about investing but don’t know where to begin, simply go to Citibank Online or the Citi Mobile App for its tailor-made Wealth Management solutions, comprehensive investment lessons and a step-by-step guide to investing with Citi. You can even click on SIP Calculator to check how much you need to save to meet your goal.