Investment and Saving

 Now a days every earning indivisual has keen interest in investing and saving his hard earned money. Most of the time we assume that investment and Saving are the same terminologies. But it is not true. Let us have a look what is mean by Investment and Saving.

Saving is an instrument for short term goals. Saving has limited scope of returns and rate of return is moderate to low which can not beat inflation. Saving is safe parking of fund for future use and has low risk level. Some examples of Saving are Fixed deposits in banks, Recurring deposit accounts,postal schemes like Kisan Vikas Patra, National Saving Certificates and simply Saving accounts of Bank and Post office. Saving can be simply explained in one equation as 

                 Saving = Income -- Expenses.

Saving is useful for our emergency expenses and for easy access of money. In any saving tool it's rate of return is known to us on first day of starting of saving. In India saving culture is more dominant than investment due to its simplicity and ease of understanding. Saving coins in Gullak and house hold pots is the very famous and basic example of Saving.

Investment is aggressive type of tool which gives handsome return over a period of time.In investment there is possibility of unlimited returns but it carries high risk ruining principal amount too. Investment is suitable for long term goals like child education,child marriage, retirement fund and so on. The wish list differs person to person. Some popular examples of investment are Property,Gold,Share market trading,Mutual fund etc..

Both Saving and Investment are important in everybody's life for smooth functioning of life. Both tools are supportive in short term and long term goal achievement. 

Start in early age with saving and stay invested for long term.

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