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difference between savings and investing

Is there REALLY any difference between saving and investing?

by Holistic Leave a Comment | Filed Under: Investments

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I have been witnessing people, especially the younger generation, working really hard and late hours in order to live a luxurious and content life. When I ask them about investments, most of them satisfactorily tell me that they are saving 20-30% of their monthly income. They seem very happy about it.

If you are one individual who saves 20-30% of your income and feel content about it, I have a game for you. Imagine you are sitting in a time machine and carrying a hundi in which you have put all your savings. Now, this machine has taken you to the future where you have just got retired.

Open your hundi now and look at what you have got. Consider a 6% inflation rate while making these calculations. You will see some amount as your retirement fund, right? Determine how you are going to manage your expenses post-retirement. Do you see what you hoped to see? Nope, right? You will also understand that this is definitely not sufficient to live even a normal life.

So, what went wrong? Why is there is a significant difference in retirement funds? Let me explain it further. Foremost among all, you must understand the difference between saving and investing? I can hear you asking, is there REALLY a difference between saving and investing? Well, read ahead to learn it appropriately.

Table of Contents

  • What is saving?
  • Is saving important?
  • How to start saving?
  • What is investing?
  • Why should one give too much importance to investing?
  • Benefits of investing
  • A financial plan to achieve your long term goals
    • a. Disciplined Investment Model
      b. Control expenses to generate savings
      c. Save regularly and keep investing for a long period of time

What is saving?

The difference between your monthly income and expenses is referred as ‘savings’. Include all the expenses like food, leisure activities, and school fees, salaries to the maid, driver, rent, bills, maintenance and everything. The balance you have is what you save.
Savings vs Investment

Is Saving important?

Yes, it is important as it helps in times of an emergency. Savings further leads to investment. Hence acts as a ladder to investment.

How to start saving?

If you feel “Saving” to be a big task, then start with a small sum, maybe Rs.500 on a purchase. Then slowly start increasing this amount. You may also make changes to your lifestyle. Say for eg: You live in a costly apartment, you can shift to a more affordable house. These small steps will help you save more.

Read: 3 secret keys to achieving success with saving money

Now that you know how to save smarter, let’s talk about investing.

What is investing?

Investing is nothing but growing your savings by means of various processes like fixed deposits, stock market, mutual funds and buying various investment instruments and products.

Still, feeling confused? Let me explain it with a simple example.

Have you seen the women who have small scale homemade pickle businesses? They save a little from their day jobs, buy seasonable fruits and vegetables in bulk and make pickles and Jam. If they keep the money as it is, it is not going to grow. Even these small scale businesses include processes and procedures to follow, to keep the products carefully and achieve a decent return. Likewise, instead of keeping your savings as it is, investing them appropriately will yield a huge return.

Let me put it more clearly now. Consider your savings as raw materials and investing as a process with which you will grow your money.

“Save to invest, don’t save to save. The only reason to save money is to invest it.” – Grant Cardone

Why should one give too much importance to investing?

Is this the question still running in your mind? Consider you have a son who wants to become a doctor in 15 years down the lane. You would need approximately 50-60 lakhs to complete the basic medical education in today’s scenario. So, you will need to save approximately 4 lakhs every year in order to accomplish your son’s ambition.

Fine, you do save the said amount now sincerely. Did you know how much money you would ‘really’ need for your son to complete medical education 15 years down the lane? It will be around 1 crore. You must always add the inflation of about 6% which will determine the right value of money at any given time. Merely with saving ‘X’ amount every month or every year, you won’t be able to achieve your long term goals.
Mutual fund returns

Hope you understood the importance of adding the inflation rate while saving for a long term goal.

Now let’s see what the benefits of investing are.

Benefits of Investing

  • Investing helps beat inflation.
  • It gives you higher returns.
  • It also helps you reach your long term financial goals.
  • Investing also saves on taxes.
  • You can have the benefits of compounding.

“Save and Invest as if you were to live forever”.

Now let’s see some of the key differences between Saving and Investing.
Save and Invest as if you were to live forever Now let’s see how to achieve long term financial goals.

A Financial plan to achieve your long term goals

You must remember the following points to make financial plans which will help in achieving long term goals.
longterm Investing

Disciplined Investment Model

You need to be extremely patient while investing regularly and religiously to retrieve huge returns. Remember, savings and investing are the two sides of the coin. Savings will help in creating your future goals confidently, but remember, investing is what will take you to achieve these goals. Merely saving a percentage from your income will not yield any results. Create a disciplined investment model and follow it religiously.

Control Expenses to Generate Savings

Monitor and control your expenses. You can control expenses by limiting the usage of credit cards, paying bills on time and using the resources appropriately. Cut down unnecessary expenditure which will generate more revenue for your savings. Further when you invest more from your savings, you will be able to grow and achieve huge returns.

Save regularly and keep investing for a long period of time

It is very important for you to save regularly, that too, for a long period of time. For example, decide about buying a house in 5 years down the lane as soon as you start earning. Invest wisely during the interim period to yield the money you want at the end of five years. Remember to consider inflation and invest wisely. Once the house is bought, set a goal for the next big investment and continue with saving and investing in order to achieve your goal.

Now, go back to the game we played initially. Get inside the time machine and go to the imaginary world of your retirement period now. Make the same calculations as we did earlier. Isn’t it looking, smelling and feeling great? Yes, saving and investing wisely, religiously and appropriately will lead you to a great future and retired life. To get this financial stability and security, to understand our unique Holistic Financial Planning Process we offer

If you have any comments or questions, write them in the comment box below.

Or are you interested in creating a Comprehensive Financial Plan for your financial goals?

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Jey S
Jey S
24. September, 2021.
I have been using Holistic Investment Planners for the last three years. Mr. Srinivasavaradhan answered all my questions and doubts very patiently during the first free consultation. I was able to clearly define my short-, medium- and long-term goals once I signed up for the comprehensive plan and got their investment plan suggestion to achieve my goals. They are very polite and highly professional whenever I contact them for any queries or make investments. They never pressurize you to invest on their recommended financial products. I would have been lost money by investing directly without their help since I do not have time and knowledge about different financial products. Risk planning is also done as part of financial planning. Truly, they are holistic planners when it comes to your financial planning. They help you to define your life goals, understand your financial resources and establish a plan to invest towards reaching those goals. They do review your plan as you progress to make sure that you are on correct path to achieve those goals. Kudos to the team and keep up the good work!!! I am happy that I found holistic investment planners for my financial planning and management.
aksaswadkar
aksaswadkar
24. September, 2021.
I was about to retire and really not understanding how to invest money to have financial freedom and fulfilling my goals. Was desperately searching on internet way out and fortunately came across Holistic Investment Planners. I read number of articles on their website and realized that this is the agency which I want and engaged their services for my retirement planning. It is an excellent experience to be associated with Holistic. Right from day one our interaction was fantastic and they gave me such a wonderful plan that I had never imagined. I am fortunate enough to be in the client list of Holistic. I have recommended Holistic to my friends as well.
Lionel Faber
Lionel Faber
16. September, 2021.
I've been availing their services for the past year. They are highly knowledgeable in the field and are very patient with all doubts and queries. Personalized financial planning is provided keeping your short term, medium term and long term goals in mind. They do not pressurize you to purchase schemes of their choice. They provide their input and suggestions and leave the decision up to you which shows their honesty and high principle.
Sridhar
Sridhar
8. September, 2021.
Financial planning brings peace in life. Holistic Investment have supported in arriving financial plan based on future goals. My investments are regular since then. They are professionals in their business, will recommend others.
Nitesh Agrawal
Nitesh Agrawal
6. September, 2021.
I have been using Holistic Investment Planners from last one year. The journey has been fantastic. Being a finance person myself I always thought we can look after and plan own finances also. However, due to lack of time and deciplain the things are not always as desired. After joining with Holistic Investment for the first time Icame to know the Financial goals and quantified them. Some dreams were unrealistic based on the earnings and savings so had a reality check. Also got the information and deciplain of investing on regular and more rewarding securities. I definetly suggest to use Holistic Investment Planners. They are professionals, available and hear youor full story before presenting plans. They are flexile in the sense if there are some urgent deviations required, they help to plan the same. For all professionals/individuals I would suggest using professional help of Holistic Investment Planners for best results in long term investment and financial goals achivements. Last advise will be to start early in your life. It really pays well to start in the beginning itself else the dreams needs to adjust :)
Swetha Vasanth
Swetha Vasanth
6. September, 2021.
This is my first year service with the Holistic Team and I would say that they are very much helpful in creating a financial plan and follow ups during the year. I would definitely suggest them if anyone who is willing to proceed with their savings professionally.
Joseph Mathias
Joseph Mathias
6. September, 2021.
I came to know about Holistic Investment Planners online while searching for different investment ideas. Once I contacted them the journey was very smooth. Mr. Ramalingam explained all the aspects of Financial planning in detail and it opened my mind. I realized how important it is to have a Financial planning. Mr. Rajan suggested all the requirements as per my goals and made a Investment plan keeping in mind of my goals. I started my Investment journey with them. I wish I had done it some years back then it would have been in a different level. Review meetings were held every six month to check the implementation of the plan and check the results as per the requirements and to check if any changes required. Overall it was a good experience with Holistic Investment team and would like to continue in the years to come.
Srinvas Kannan
Srinvas Kannan
30. July, 2021.
I came across Holistic investment planners almost 5-6 years back, but I did not have the trust since I had met a few of them who did not sound promising. Then I started investing through a financial advisor of my friend. After 4 years of investing the returns were very low. I was disappointed and started looking for financial advisors when I came across Holistic investment. I had a detailed discussion about my goals and the way they would approach achieving my goal before deciding to switch my investments to them. After a thorough analysis of my then existing portfolios, they suggested new ones and we zeroed-in on 6 schemes/funds where our investment would be split. I am glad I made the decision of switching over and taking Holistic planner's advise, my returns are handsome and I only wish I could have taken their help/advise 5 years back itself. Neverthless, I would like to recommend their services for investment and financial advise if someone is serious about their investments.
Shivaram Andiappan Selvaraj
Shivaram Andiappan Selvaraj
3. July, 2021.
I got a free first time consultation. I got my doubts resolved. They also gave additional advises for investment planning which was also useful.
Nellai B
Nellai B
26. June, 2021.
I have been associated with them for the past three years. They are very professional and polite in answering all our questions. I have complete trust in their suggestions. I strongly recommend for anyone. I am looking forward to have strong and successful association with them.
Google rating score: 4.4 of 5,
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