Dear Business Owner, Savings or Investment?
As an entrepreneur that has realized the importance of one or both, and is seeking to secure your financial future, this is for you!
Let’s talk Savings
This involves separating a particular percentage of income received, and keeping it aside, mostly towards a future purchase or for emergency purposes. It is definitely safer, but has minimal gains and is mostly a short term plan with easy to access funds.
Investment on the other hand, is the process of keeping your money in a place that yields more for you. It involves setting money aside for business purposes with the aim of getting interest. Investment requires a high level of risk, it is long-term, with no easy access to funds unlike savings.
While they are both crucial steps to be taken in order to have a strong financial foundation, some changes would be required in order to make a transition into this deliberate lifestyle. Spending habits would have to be checked, and income tracked.
Now, there is no universal answer to this question, as people’s decisions would vary depending on diverse reasons and thought processes. But, it is important to know what each of them entails, (that is, the risk involved and the time frame).
It is also important to know your risk tolerance level, your financial capacity, and the purpose for which you want to save/invest.
Considering these factors would go a long way in helping you determine which of them to go for.