Between Saving And Investment

It is better to know in advance the difference between saving and investing. Saving money means we put aside money without expecting an increase of the value of the money we save. By saving money in the bank, at least we know that the money would be safer than if we put it under the pillow. Indeed, if we see at a glance, a wide range of savings, the bank offers savings rate of 1-3% annually. However, if we look, every year, the prices of goods are always increasing with the percentage that far exceeds the interest savings that we get. If we are aware, we have reduced the actual cash value.

While if we invest, we expect an increase of the value of money over time, so it will give us benefits. The money is expected to deliver increased value of investment called an asset.

Types of Assets
In investing, where there are two kinds of assets, i.e. real assets and financial assets, which both can be considered as an investment vehicle in order to achieve your financial goals. In investing, you should remember that there are always risks of losing your money. Therefore, you must really know the assets which would you choose to invest.

Real Assets
Real assets are assets that have the form. For examples: land, houses, gold and other precious metals. This is a common investment way. For example, you buy a house, and then rent it so you get a monthly earning. When the house was finished hired and the price goes up, you can sell and earn profits. You will get many advantages of investing in real assets, because even if the price can go up and down, but in the long term will likely continue to rise in value.

Financial Assets
Financial asset is an asset that its form is not visible, but still has a very high value. Generally these assets are financial assets in the banking sector and also on the capital market (stock exchanges). Some examples of financial assets are money market instruments, bonds, stocks, and mutual funds.

Choosing the type of investment that suits your choice
Once you learn the types of investment above, then the steps you should do is figure out the benefits of any type of investment. Each type of investment has some special characteristics, namely the potential yield obtained, the level of investment risk, ideal investment period, and the amount of money needed.

For long-term needs, it would be great if you pick stocks and property that is the appropriate type of investment, because it provides the potential for high growth in investment return.

While bonds are appropriate investment for your medium-term needs because it gives you coupons periodically. Meanwhile, for the short-term investments, products such as bank saving is the most appropriate financial products.

Once you can understand the benefits of each type of investment, choose one that best suits your needs, the length of time and finances you have. In addition, you should also consider other criteria that make you confident to invest.

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