Monday, 27 October 2014

Between savings and investment, which is better for you?


Between savings and investment, which is better for you?

Financial experts have advised that it is important for one to build investment culture rather than leaving money in the bank. This is because investment, with its high returns, has the potential of enhancing ones earning capacity than savings does.

According to them, though it is good for one to save, but it is also good for the person to learn to invest good portion of the savings in a long-term plan, capable of yielding returns.
Studies have shown that saving a good portion of one’s income each month is only an opportunity to have access to the money whenever the person is in needs it, such that at the end of the day, the income is used in taking care of the person’s immediate or unexpected needs.
Olumide Emmanuel, an investment adviser, opined that depositing one’s entire money in bank is a costly choice because in the bid to avoid liquidity risk involved in investment, one ends up getting lower returns, but investment brings higher returns that can secure ones future.
Also, studies has it that the current Nigerian economy with unstable Naira value including high inflation rate, makes it difficult for people to leave say N500,000 in a bank and it get the same value in a year’s time. As a result, it has been seen to be far better to invest such money rather than keeping it in the bank for inflation to eat it up.
Experts’ view that investments provide higher returns, but come with lower liquidity risk and fluctuating values, which one can manage by aligning the appropriate investment perspective for the products considered in line with one’s goals. Thus, funds for immediate needs and emergencies should be kept in banks, while the ones for meeting long-term goals should be held in investments that give better returns.
What are these investment options?
1.      Think of buying land if you want to be a house owner in the future because investment in landed property is hard to depreciate.
2.      Invest in shares and stocks, though there is liquidity risk involved but if you are a smart investor, you will be smart to sell-off your shares or stocks at maturity stage.
3.      Explore the option of building your own house or buying finished residential or commercial property, and you will not regret it because the risk volume is low.
4.      Have you thought of investing in bond or debenture, it can also pay you in the future than banking your entire earnings.
 However, always remember to review and modify your investment choices periodically to ensure that they are suitable for your current investment goals.

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