Saving vs Investing

Been making a killing on Steemit and not sure about what to do with the cash? I'll give a basic rundown of saving vs investing and link some interesting videos that might get you thinking about how to handle all of those sweet $D.

Should I Save or Invest?

Saving. It's something that our parents tried to teach us, but it's also something that would've worked better for them than what it does now. Saving made sense in the 50-60s. Back then you were able to work a normal job and save up enough money to buy a house for cash within a few years. Today it would take more than just a few years and often more than one income to pay for a house.

Investing has become the new savings. If you want to acquire any sort of wealth nowadays you will need to learn about investing cause saving up your extra money just won't cut it.

When you think about saving vs investing something that you might check out is this video by legendary investor Warren Buffet. Understanding what you are investing in is crucial to your success in the world of investing. We'll start by listening to Buffet define the difference between fixed-dollar assets and income producing assets.

"There are two types of assets to buy one is where the asset itself delivers a return to you such as rental properties, stocks, a farm... And then there are assets you buy where you hope somebody else pays you more later on but the asset itself doesn't produce anything."

Buffet goes on to give a basic example explaining the difference between fixed-dollar assets and income producing assets.

"I will say this about gold. If you took all the gold in the world, it would ruffly make a cube 67 feet on a side... for that same cube of gold, it would be worth at today's market price about 7 trillion dollars. That's probably about a third of the value of all the stocks in the United States. So you can have a choice of owning a third of all the stocks in the United States or you can have the choice of owning the little block of gold which can't do anything but kinda shine there and make you feel like Midas. For 7 trillion dollars there are ruffly a billion acres of farmland in the United States. They're valued at about 2.5 trillion dollars, and that's about half of the continental United States. You could have all the farmland in the United States, you could have about 7 Exxon Mobiles and you could have a trillion dollars of walking-around money... call me crazy but I'd rather have the farmland and the Exxon Mobiles."

Savings itself is like putting your money into a piggy bank, it's slow growing but secure. Investing is slightly different because there is more risk involved but a potential for a compounding return on the initial investment isn't something to shake your head at. Investing is a little more complex than just putting your money in a bank account but its rewards can potentially make the difference between you working for money and your money working for you.

With savings putting your money into a bank account might give you 1% annual return if your bank is cool, but with investing seeing a 7-10% return is not uncommon. They are different games with different strategies. Both result in money but only one has the potential for much greater returns. Although investing in the wrong assets can equal a loss in certain scenarios, overall if you use proper risk management you should be able to reach a point where your investments earn you more money than what you could make working a normal job.

Investing is not passive

If you do choose to go the investing route and want to invest in something other than crypto currencies you will need to learn about finance and investing. Being an investor and finding opportunities is a valuable skill that can be acquired but it will take some work. Remember that diversification is key to your success but to make sure that you aren't just blindly guessing as to what investments to make you need to do some research.

Love him or hate him, Martin Shkreli has one of the best introductory courses available completely free that can be found on Youtube. The entire series is 18 videos and each one is fairly long. It's great for someone just looking into investing as a newb and he has an interesting perspective on finance​ and investing in general.