There are two ways you can use your retirement funds: 1. You can start investing early. Proceeds from the investment get re-invested and what you generate gets reinvested again. That means as you add more and more money to your initial investment, you get richer not super-rich, but well . . . rich enough to live well after you retire. 2. Stash your money in a bank and earn a little compound interest. It's safer but you once you retire you'll have to start thinking abut investing or maybe possibly blow away all your money and end up on the street. How do you your stuff?
I do both since the mixing and matching is usually the best way to go. What I did was I made my emergency fund (a fund that will keep you afloat when disaster strikes such as losing a job, death in a family, etc) first. This enabled me to take on risks while remaining comfortable with my current status because I know that have something to fall back to. My emergency fund is placed in a local bank and it's currently earning a small interest which is totally fine with me since it's still better than no interest. I then started my business fund (a fund where I get all my monetary needs for future businesses or investments) and I applied for a mutual fund at the same bank. I linked my mutual fund to my business fund and opted for an auto-debit so that I'm automatically putting money on my investment each month. I'm still young, currently 19 turning 20 on September but I figured out that starting young would be an advantage because I can take more risks compared to when I'm older. Time is of the essence right?
I think both are great ideas. However. I prefer to save. Investments are always risky. You never know how they will turn out. That is why i prefer to save. Unless there is a no risk investment being offered, and that is extremely rare. If i save my money i will always have something in the bank to fall back on. If i invest to much i could end up with nothing. I think the best idea is to have a steady balance between the two. Make a plan, and stick to it.
I don't want to offend you but these are some of my takes regarding our discussion. The thing is if you just save money till retirement, what will happen to you when you eventually retire? Is it okay for you to just depend on your retirement money? How sure are you that your money will last? Those are just some of the things that we should ask ourselves if we want to prepare for retirement. And keep in mind that the older you are, it's more likely that you'll have to spend more money for your medicine and hospital bills. Every thing in life has its own risks but we shouldn't let the risks prevent us from getting what's rightfully ours. Besides, there are some investments that are less risky so maybe you could inquire about those. I'm just giving my two cents regarding the topic. And a healthy discussion ain't bad right?
Definitely not bad. Maybe the plan is after you retire and have saved enough money, you can invest a little of it in something, see how it turns out before pumping in more money into the project. It's a prudent way of taking minimal risks IMO. However for the "all or nothing" guys like me, I'm used to taking risks and won't hesitate investing most of my mine until I find an investment that pays a good ROI.
I agree with saving rather than investing. There are so many investment schemes out there that are only geared to take all you have, and the scammer runs away with it all to an island retreat, and lives off the interest from the savings account. Of course, there are investments that aren't risky such as holding on to something that you know is just going to climb in value, but those exceptions are incredibly rare, and they're often just 20-20 hindsight, like Google shares and AT&T shares before they became corporate giants.
Right now I'm focused on saving. I want to build up my contingency fund (emergency fund). I already have a 401K from a previous job. Thank goodness I didn't touch it. By the end of the year I should be ready to start investing. I will be looking at fairly safe investments. I really like index funds. I am also interested in real estate investing, but I don't have any experience with it.
I totally agree with you here. Investments might be risky but the more risky it is the more the returns. Savings are good for you to cushion yourself against emergencies like lay-offs etc. But you shouldn't save all your money because with the high rate of inflation you'll probably lose in the long run. Once you've had your emergency fund up and running you should probably start investing. Stocks and mutual funds are a good option
You have to consider your needs both short term and long term. Obviously, it's difficult to purely put your money on a bank account and to hope that it will be enough to meet your retirement needs. (I say "obviously" but in reality a lot of people don't factor into their thinking inflation, low deposit rates, opportunity costs etc). That's why people need to invest with a long time horizon to smooth out the market volatility. If you want to get a better return on your money, you've got no choice. As long as where you put your money properly aligns with your risk profile (your willingness and ability to take the risk), then you should be fine. But I'm guessing a lot of people were scarred off by the global financial crisis and would prefer to stick their money into lumps of gold, which isn't a viable long-term alternative in my view.
It's good to do a little of everything! a little investing and a little saving coupled together certainly will not harm you- in fact, it will do more good than bad, so, refrain from just saving-spread yourself, give yourself the opportunity to be able to earn more from your money! Also, it is wise to do both with a long term plan in mind, short term plans are useful yes but you will get more if you think about what you need to achieve using long term goals.
I think a mixture of both is still the best, but if I had to choose one I would definitely go with investments since it is much sensible in the long run considering inflation will probably negatively affect your savings if you just keep it stagnant for long periods of time. However, as already mentioned, investments can be a little risky which is why it's also good to find the midway options such as mutual funds.
I think saving in the end would be much more profitable than investing in the long run. I think saving is much more healthy to rely on because mentally, investing is a lot of pressure and stress and you could lose. A lot of people harm themselves through investing their savings and money they would of actually needed in the future, lost it all. It's sort of a gamble.
Good boy! I wish I have started my own savings fund/emergency fund since when I was young as you. I have started saving during my early 30s (now I am 40) and.. its very challenging! I do have Emergency and Business funds as well. I also have made some investments and started small (online) businesses as well.. but it could have been better if I started early. You are on the right track boy! Keep it up!
In my case, I am saving in the bank and at the same time I've invested some on Insurance. Money in the bank is relatively safe and easy to take a hold of but an insurance investment for me is also very important as we never know what will really happen in the near future. Insurance plans nowadays have investment options so I think it's a great way of growing my money for my retirement while at the same time I'm protecting myself and my family for whatever fate will throw at me.
I still have a few more years before I receive my retirement pay. It is a big amount so we plan to invest it in real estate like an apartment or a house that we can rent out. Having no more income in those years, it is an encouraging thought to have a property that can earn for us no matter how little. If things go right, we will have a duplex apartment so we can have 2 tenants that the rent would take care of our daily expenses.
I have a bit of savings and a bit of investment. I'm still struggling with the former since every now and then I dine out with friends or take a few days of reprieve in places I've never been to before. The latter is still there and has been so for almost 4 years now but I'll have to wait 6 more years before I can really see some returns.
I would do a mixture of both. You can have some money put to the side for investment. Then you can have some money purely for saving. If you have the type of savings account that has some interest that would be slightly better. I don't see why you can not diversify your income.
I don't focus on savings as much as I did before and I only save nowadays because I want to increase my emergency fund/retirement fund little by little. I'm shifting all of my focus on investing because that's where the money is. By investing my money on stocks, mutual funds, and other kind of funds, I'm increasing the value of money over time. I tend to invest on a mixture of low risk - medium risk - high risk investments in order to protect my capital from a sudden plunge in the world market.
Saving and investing both are a good ways to boost your retirement plan. However, I prefer investment to saving. I am can save some percent of my income every month and deposit in a saving account in a bank. The interest in saving account is around 5 percent in my home country. However, if I invest, I will earn more. Investment is risky, but there is better profits.
Basically speaking, you invest to earn more. Saving isalright if you're thinking on spend it into real state or another high valuable asset like gold. Hoarding currency is not really a guaranteed way to secure your wealth,since is subject to inflationa and/or devaluation. Ask the British if they now are happy with their sterling pound savings.
