Saving or investing, which is better?

rich base notesA proverb that is definitely familiar to your ears. since childhood You and I are always told to help. Usually not to get rich, but to prepare for the future and pocket money so that you don’t run out of snacks.

But in recent years, other terms have been used in the application. save rich base. Term is an investment It is said that investing can make us rich faster than general savings, right? So what’s the difference between saving and investing?

Difference Between Saving and Investing

although similar But in reality, saving and investing are two different things. Here’s the difference:

definition

Savings are activities that allocate part of the income or pocket money in preparation for future needs. There are two tools you can use to save money: the piggy bank and the piggy bank.

Whereas investing is a process of sacrificing some resources in order to gain future profits. The resources here are not just money. Therefore, it can be said that investing is not only the purchase of stocks, mutual funds or other financial instruments, but also the sacrifice of money, energy and time for studying or developing skills. too

result

The result of the savings will be approximately equal to the amount you have accumulated. For example, every month you save IDR 100,000, so in a year your savings will accumulate around Rs.1,200,000, if not, maybe just a few thousand in savings fees. manage bank Savings in banks carry interest rates. But in general, the interest rate for bank savings is not greater than the capital gains.

On the other hand, your return on investment may be more or less than the amount you deposit per month. Because in investing you have the opportunity to benefit in the form of: capital gain and dividends, as well as the opportunity to lose in the form of capital loss.

guarantee

Saving money guarantees no potential capital loss. While there are no investment institutions that provide guarantees.

Deposits in banks, both in savings and deposits, are guaranteed by the Deposit Insurance Corporation (LPS), unless the value of the deposit is more than Rp 2 billion. On the other hand, any form of investment is not guaranteed.

risk

Saving is safer than investing because saving in a bank is guaranteed by the government.

The possibility of loss and unsecured funds from IDIC makes the investment risk comparatively higher than the savings risk. Therefore, it is best to invest using the services of a company that already has a license at the Financial Services Authority (OJK) for the product. capital marketor Commodity Futures Trading Regulatory Agency (BAPPEBTI) for commodity market products such as cryptocurrencies.

What about skill investments and real estate? Make sure you choose a course institute and developer with good track record. Because generally this type of investment is not profitable immediately.

If you don’t want to take the high risk, you should Invest in low-risk assets But it’s not very useful.

So is the savings without risk? The risks are definitely there. If you save money in the piggy bank, there is a risk of losing it. Like saving in the bank The risk of saving in a bank may be that the bank goes bankrupt so that your money will not be returned. Or the savings interest rate in the bank is not the same as the inflation rate. However, this risk is relatively small because of the guarantee from IDIC.

reach

The only difference between saving and investing is access to money. In this case, the funds that are kept are easier to withdraw than the money invested. Especially now that there are mobile banking applications and digital wallets. You don’t need to go to an ATM to withdraw money to spend.

On the other hand, the invested money is not always easy to withdraw. It depends on the type of investment tool. money invested in Money Market Fund (RDPU) For example, it may take at least 2 business days for disbursement. This is definitely different if you are investing in real estate such as a house or a dorm. To disburse the benefits of such real estate investments You have to sell your dormitory and or home, which can take months.

how to handle

Have you ever thought about what banks do with your savings? can! Generally, clients do not think about spending money with banks because they fully trust the institution. You need to know that your bank savings will be passed on in the form of institutional credit.

Unlike investing, in investing (except mutual funds), you have to manage your own money. As a result, you have to be smart in choosing the issuer. Selection of investment and management tools

Is it better to save or invest?

So which one is better? Saving or investing? To answer this question You should at least consider the following:

benefit

Better investment using cold money or part of the income intended for investment This savings is suitable to meet daily needs. urgent need or short-term needs

liquidity

as mentioned above Investment assets are generally harder to liquidate than savings. As a result, you have to be good at collecting investment or savings preferences based on their needs.

profit and risk

What more do you want? Get additional benefits aka passive incomeOr avoid risks? if you want to get passive incomethen the investment is better But if you want to avoid the risk Savings are better.

Due to differences and some factors above Many people invest and save at the same time as they need, such as setting up an emergency fund in a provident fund and investing in mutual funds to prepare for the next two or three years of their wedding. That person will have easier access to their emergency fund.

Tips for Sharing Money for Savings and Investing

in general, The percentage of money allocated for savings and investments. It’s 10% -20% of income, so it’s not uncommon for the amount allocated for these two things to be quite limited. How about splitting 10%-20% for savings and investments? Here are some tips:

1. Determine the purpose and useFor example, an emergency fund goes into a savings fund. Preparing retirement funds as investments
2. Set long-term and short-term goalsFor example, the long-term goal for an emergency fund is at least IDR 5,000,000, so the short-term goal for this savings setup is IDR 200,000 per month. The goal is for you to know how much you have to put in and how much to invest.
3. put in another bagFor example, Investing uses Application A, Savings uses Application B. The goal is not a combination of savings and investments.
4. Take advantage of the automatic debit feature.. so as not to confuse you There is now an automatic direct debit feature provided by banks and investment apps to automatically set aside your money and put it into savings or investments.

Saving and investing are two processes aimed at preparing for the future. It is important for a person to distinguish between the two based on their level of need.