If you've got some extra cash, have you asked yourself, "Should I save or invest them?". To choose saving - putting money aside until you need it, or to choose investing - putting your money into something that will go up in value over time.
The answer, surprisingly, doesn't come down to how much money you have. However, several factors will help you decide whether to save, invest, or do both.
What is your goal?
It is simple but brilliant advice to follow – always know your goals. Do you want to go on holiday twice yearly and buy a new car every three years? Or maybe you want to collect money for real estate in five years? Big or small plans – everything counts. If you have more than one goal, you should consider saving (for short-term goals) and investing (for long-term goals). Creating a monthly budget and having investment and saving strategies is an excellent place to start.
Inflation
People usually save money to pay for something specific. Eventually, if you keep your money in your bank account, you will lose some money because you need to keep pace with inflation. In other words, if you use your money today to buy something, the same funds will usually buy less due to inflation in the future—especially these days when inflation is still very high. Therefore, your savings will be worth less than they are now. There is no magic; as simple as it sounds, saving is less effective than investing.
Unexpected situations
However, before investing, you should build up emergency funds if something unexpected happens that needs extra cash. The money should be in an easily accessible account. It is a common rule to have at least a few months' worth of living expenses in an instant-access bank account for those unexpected situations. Additionally, the rest extra money should be invested.
Grow your money
By only saving money, you always have easy access to your money. Thus, this could tempt you to make impulsive purchases. With investments, you usually should wait until you withdraw funds. For instance, you might invest in stocks, bonds, cryptocurrency or choose P2P platforms. However, at hive5, you can start investing from 10 eur, even for a few weeks, and after that, consider reinvesting or withdrawing funds.
To sum up
Undoubtedly, investing gives your money the potential to fulfil your goal faster. However, we recommend you do both. Invest and save some money for emergencies. Also, when investing, it is crucial to invest wisely. Always diversify.
Now is the greatest opportunity to grow your money. With a relatively small amount, you can grow your money monthly. At hive5 earn up to 17% annual return. If you need any investment advice, we are always happy to help you: info@hive5.co