Investing is the way to go these days. Saving accounts don't earn the money they used to, whereas real estate for example can have a high appreciation value. People are wising up to this and the banks are starting to worry.
The key word is can. There are many properties that have not appreciated in real value since the 1930s. In some cases in real dollars the value of the property has actually depreciated. Banks are not worried, since they money they lend no longer comes from savings. Banks now days are more loan brokers per say. They get money from a central bank, lend the money out and then collect a cut on the interest. If the loans go bad, banks have nothing to worry about, the government just bails them out. So it is a case of the banks collecting profits and the government taking the risk.
This brings me to a thought that investing is indeed "saving" because you generally put away money you won't be using for a longer period of time but the only difference is that it's not just sitting stagnant but it's working on its own while being saved for the future. This is how I see it now, if I'm right on this. Now I would consider money put into the bank as emergency funds rather than savings. It's funny how I'm just realizing this now. Thank you for that enlightenment.
Sure, investing can be considered saving when the risk is low, because I think we have all seen it before, when we consider our money is well invested and we have good savings, something goes wrong and the money disappears.
There are just a ton of trade-offs you have to make Availability - Savings accounts are safe because if you need the money, you can take it. Other investment vehicles that pay higher interest have a lock-in time, so your money isn´t available. Investing in stocks is a mixed bag.. your money is instantly available, but it sucks if you are forced to sell stocks when the price is down. Risk - Savings accounts are safe, but that is because you are not making any money from them. In most situations, you are being paid about the same as inflation. The more you move up the risk chart, the more chance you have for high returns. I don´t think you need to have 6 months worth of cash available ( since that means you have a lot of money sitting around not earning anything for you). But I do think you need to have a cascade of invesments which will provide money as you need it. For instance, you have 2 months of cash available, but then you have some safer investments like a 3 month t-bill that will be available .. etc. With stocks, you should only invest money that you won´t be needing for a year or more.
I think this is my biggest weakness. I have a strong will in investing but by the time I think about the "risks", my will turns to fear and I tend to want to back off. Good thing my husband has more courage than me when it comes to facing risks. I've been used to the safer side of "saving" before but it can sometimes be frustrating to see your money just sitting there not gaining anything.
Well yes, investing can be considered as saving but always remember that there are risks involved with every investment. Like I said earlier, it's good to invest the extra money you have but just make sure that you don't need to sell your investments if you don't want to, some cash is always good to have because you never know what happens.
It's a matter of choice really, some have the possibility to have extra money to invest, while others save to go on vacation or to make a trip or just for the day to day expenses, not everyone can invest!
Investing is a choice, not everyone can do it but most adults will at some point in their life be in a situation where they could easily start. Investing is not only for the rich... it's for your average joe.
I can agree with that crimsong, there is a point in life where I can invest indeed. I do recall my brother in law though, he invested a good amount of money in a company very trusted that collapsed, so that makes me think twice.
