All the \u201cget rich\u201d advice in the world revolves around saving your money. The problem with such advice is that it often misses out the point that saving money will merely increase your chances of getting rich through other platforms, by utilizing your savings appropriately.<\/p>\n
To build wealth, you must first think of ways to make your savings grow faster that the rate of inflation. Read on to find out why having a golden egg is not as good as having a golden goose:<\/p>\n
Although the terms \u201csaving\u201d and \u201cinvesting\u201d are often used interchangeably, they do not actually mean the same thing.<\/p>\n
Savings, by definition, involves the preservation of money from physical loss. Methods includes stashing your hard-earned savings into fixed deposit or under your grandfather\u2019s pillow.<\/p>\n
Investing, on the other hand, is taking some of your money and buying things that might increase in value, such as stocks, property, bonds or unit trusts, with the aim of protecting your money from losing its value, and also making your money grow.<\/p>\n
While saving money is a good habit, it does not necessarily protect you from market conditions such as economic downturns or soaring inflation rates, which might cause the value of your savings to diminish over time. Saving money merely creates opportunity, while investing is the one way to capitalise on that opportunity to potentially create wealth.<\/p>\n
To beat inflation and maintain your current standard of living, you would need to make your money grow at a rate that is equal or higher than the current inflation rates to rake in a sufficient amount for retirement.<\/p>\n
Some ways to accomplish this is by putting money into investments like property,<\/a> unit trusts<\/a>, Real Estate Investment Trust (REITs)<\/a> and private retirement schemes (PRS)<\/a>.<\/p>\n Most people have the same financial goals: to live a financially comfortable life, provide for their loved ones, and have a stable retirement income in their golden years. To achieve these, certain short-term and long-term financial goals must be achieved.<\/p>\n Living pay cheque to pay cheque does not help, and putting away money aimlessly will only get you so far. Investment can help you systematically plan for these goals, without putting away all your money into savings.<\/p>\n However, everyone has a different investor profile with diverse goals and needs. Safety of capital, income range, age and holding power are some factors to consider when deciding on the type of investment to put your money in.<\/p>\n If you\u2019re 55 and nearing retirement, and are hoping to stretch your retirement fund, you might want to play it safe and put more assets in lower-risk investments, such as unit trusts or saving bonds.<\/p>\n However, if you\u2019re 25 and are saving for your first home, wedding and also your retirement fund, you can afford to roll the dice a little bit more and put more of your money in higher-risk investments like stocks. Being young gives you a longer time horizon, which allows you to weather and ride out the market\u2019s highs and lows.<\/p>\n At the end of the day, it is always worth having a good reason to start something. Writing down your financial goals will help set you on the right direction and help you stay on track.<\/p>\n<\/span>2.\u00a0<\/b>It\u2019ll take longer to reach your goal<\/b><\/span><\/h2>\n