In a world where prices are rising every day it’s becoming a necessity to save more than spend our money. In this situation, you must do whatever necessary to save more money. But with inflation will saving money be enough to secure your future? Will all your savings help you live a comfortable life without a worry?
The answer to all these questions is negative. Even if you save more money now it will still be difficult for you to have a proper saving to last your retirement. This is because of inflation where the cost of living increases every year. This means the products and services you use today will cost you more every year which will increase your living cost.
So, the only solution you have is to invest your money to survive the inflated price of living in the future. Let's know how you can save your money while growing it through investing. In this article you will learn everything about investing, from why it's essential to invest to how to invest.
What is Investment?
If you're not already aware what investment means, let us throw some light on the topic for you to understand investment easily. An investment is when you purchase an asset in hopes of getting higher returns over time. This asset will generate higher income for you in future, so this increase in price is known as appreciation.
So, the only way you can beat inflation is through appreciation. So, when you make an investment using your money to purchase an asset you should look for appreciating assets. Some of these appreciating assets are real estate, company stocks, precious metals like gold, silver, etc.
Presently you will see investment is not only referred to regarding assets only but time and effort as well. So, for example you can take your college degree which you have gotten in hopes of getting better career prospects in life. From learning skills to getting a good job is what will increase your investment when you earn a college degree. So, it's a type of investment.
How Invest Functions?
You might have been saving for quite some time in hopes that your money will save you during rainy days or in old age. But what if that’s not what will happen when you reach the end as the cost of living is increasing day by day. This is where your investment will save you.
When you invest in an asset, you invest in the hope of getting a higher price when the time comes. Or you might invest in an asset that’s predicted to increase in valuation in the future.
Why Invest?
Investing your money helps you grow your money over time which helps you compete with inflation in the future. Our lives are unpredictable, but inflation isn’t. In this capitalist world, money is the only thing that can get you things and services. So, in this situation you must find ways to keep yourself financially secure. This helps you deal with any situation and not fall into the dept trap leading to a stressful life.
Bank FDs or savings account would not be able to give you proper returns that can deal with inflation. So, where else can you go other than to find an investment option that will generate more income or increase valuation in the future.
So, when you invest in assets like real estate or stocks which have shown in the past to increase valuation your chances of getting higher returns increase. This way when you invest some of your savings in assets which will increase in value you can grow your money. This is why everyone presently invests at least 30% of their money in income generating assets or assets that will increase in value in the future.
Different Ways To Invest
You can invest in several ways like stocks, land, government bonds, precious metals or in developing a skill. Presently several other investment options are coming are available like mutual funds, equity and small businesses which are growing rapidly.
You can invest your money in assets by studying the market and how that asset might perform in the future. Make a point to study particular performance of the asset through the years to get an idea of its growth.
Every asset which is worth investing in will show you its value through the years of its growth in the market. You can take the example of a stock which has a fluctuating valuation but is still worth investing in. This is because when you study the whole picture and the stock growths throughout the years you will see higher returns.
So, just like you need to know where to invest your money to get higher returns you must also know how to study your assets before investment.
Invest In A Degree Or A Skill
Another major investment that isn’t any asset is when you invest in something like a skill or degree. These are not assets but are investments which will give you higher returns in future. Since investment goal is to generate more money than what’s invested then these investments do help you get more income. Keep reading to know how these investments work.
When you are investing your money in gaining a degree, you are hoping to get good returns in the form of high paying jobs in the future. But a degree cannot be only earned with money, but your time and effort must also be included.
You invest in a college degree with your money, time and effort in hopes of better returns. When you get a good job, you automatically earn money to sustain a living while getting your money's worth back. This is what is investing is
You can also invest in learning any skills to get a good job. This will increase your chances of generating a higher income when you get a job that requires the skill. So, an investment can be more than an asset like a college degree or skill development.
Seven Steps To Help You Save Money And Invest For Your Better Future
As living prices increase around us so does our stress of how we will cope up with these inflated prices. So here are seven ways you can help save money so that you can invest in a better future for yourself and your loved ones.
Get A Better Understanding About Your Income And Expenses
You must get a better understanding of your income and expenses. Know how much you need to make a living while saving your money. Once you get the hang of it you can easily save a lot of money.
Try Decreasing Your Expenses
Find ways to decrease your spendings if you can, this will help maximize your savings. When you map out your expenses you can see which are the areas you're spending unnecessarily on and cut these spendings to save money.
Keep your focus on your needs and not wants when trying to decrease your expenses. This will help you easily identify your unnecessary spendings.
Find Ways To Increase Your Income
Want to know how to increase your savings? Then try increasing your earnings to boost your income. These are some of the ways you can increase your income.
- You can opt for freelance work based on your skills.
- Try side hustling like selling used products, tutoring, dog walking, etc.
- You can try part-time jobs during weekends if you are working full-time to get some extra income.
- Try negotiating your current reimbursement.
- You can also try different gig works like Postmates, DoorDash, Uber or UberEats.
- If your current pay is not suitable for making proper savings, then change your job to get better pay.
Automate Your Investments And Savings
If you are someone who forgets to save some money at the end of the month, then this is the best way to save your money. You can automate your investment and savings directly from your salary account. This helps automatically transfer some of your salary into your savings account once your salary is credited.
Manage Your Debt
If you have taken a loan, then your first job is to pay off your loans as fast as possible. Be it your car loan or education loan or phone loan, paying off your depts helps save your money.
Since you must pay back your loan amount with interest, you must start paying off your debt as soon as possible. This will help you start your savings journey early, giving you ample opportunity to invest in the long term.
Create An Emergency Fund
As soon as you start earning, create an emergency fund for yourself. You already know how unpredictable life is so it’s our duty to take precautions against emergencies. So, create an account where you keep your emergency funds to avoid stress and financial hardship.
Invest In Your Future
You can save all your money but if you don’t know how to grow your money than inflation can ruin all your future plans. So, try investing in income generating assets like bonds, precious metals, real estate, stocks and mutual funds. These assets increase their valuation over time helping you get higher returns.
Conclusion
Life can be predictable, but you must always be prepared for whatever it throws at you. Through savings and investments, you can live a comfortable life in your old age therefore securing your future.
Again, you can secure your children's lives when you save up for their education which helps them avoid taking loans. This helps increase their savings and they can invest at an early age. Therefore, savings might not feel like an important topic at the present yet it’s one of the ways you can secure your future.
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