STEEM NIGERIA WEEKLY CONTEST: SAVINGS AND INVESTMENT by @anselam.
INVESTMENT AND SAVING
WHAT IS INVESTMENT?
This is the process whereby a person put his capital (an amount of money) into a particular business or any activity at all with the aim of deriving income or profit from the gains made from such business or activity. This can also be the act of putting money into an asset and making profit from the appreciation in the value of such asset.
In this type of financial activity, the gain or profit is not expected over a short period of time but after a long time. People who invest are usually Called investors. In investment, the investor does not necessarily participate in the day to day activities of maintaining or running such a business but his money is what is doing the work for him.
In investment, two outcomes are possible; either you gain from it because the thing you invested your money in is yielding the desired result or gain OR you lose your money if it fails to work out as expected.
WHAT THEN IS SAVING?*
This is somehow the contrast or opposite of investment. Here the owner of the money or asset does not put it into any business or activity at all, but sets it asside for future use.
When you save, you are not at any risk of losing the money due to anything, but at the same time, the money you saved could lose it's value to the point that it is almost worthless before the time you want to use it.
While some people will always hope that the value of the asset or money they are saving does not depreciate to a disastrous level, it is a risk that is characteristic to saving.
Many people think that there is no risk involved in saving, but I can categorically say that it is also risky because if you decide to save your money for twenty years, it is almost certain that the value of that currency will not be the same after that period of time and if the change is negative, then the amount you will withdraw will be less valuable than what you saved.
DIFFERENCES BETWEEN INVESTMENT AND SAVING
1 - In saving, you cannot lose all your money due to the depreciation in it's value, but you can lose all your money if your investment fell through.
2 - The profit made from an investment is always higher than what is obtained in saving no matter how the value of the currency saved appreciated.
3 - In saving, you can take out your money at any time, but in investment, you must wait till the end or any time you stipulated as the exit point of your investment.
MY EXPERIENCE
Some years ago, I had money to buy a phone, but I did not want to buy the phone at the moment so I decided to set it asside till I finish my exams which I was handling at the moment. But guess what, when I finally decide to take out the money and purchase the phone, the money could not afford the phone again due to the decrease in value of the currency, inflation and the rest of the things, this was a very frustrating scenario for me considering the fact that I thought my money was safe.
But a few years later, I needed to buy a laptop for some of the things I needed to do, I had a certain amount of money but it was not enough for me to purchase the type of laptop that I wanted. So I thought about setting it asside till I had enough money, but after remembering what happened to me a few years earlier, I decided to take a risk and invest the money in blogging and other digital businesses.
At first, it was not paying off so I had to remove my mind from the earning part of it, but after some times, it started yielding profits and after some time, the money was enough to buy not just a laptop, but many of it.
Source
WHICH ONE DO I PREFER
With the scenario I just explained above, there is no Suprise that I will definitely prefer and I have always preferred investing my money or asset instead of setting it asside in the name of saving it.
REASONS: While saving your money can help you in unforseen circumstances, it is best to invest your money because it is a way that you can multiply your money instead of keeping it without doing anything with it.
Investing your money is like putting your money into work, you stay at the comfort of your home while it works for you.
CONCLUSION
Saving your money makes it safe to some extent, but it does not give you the chance of gaining profits from it. On the other hand, investing the money will give you the opportunity to earn some income from it, but you need to do it with ought-most carefulness in order not to lose your money.