(five minute read)
There are a lot of things I wish I'd known about money sooner, though one of the big things that wasn't clarified in detail was the difference between saving and investing. It's one thing to save, it's a completely different thing to invest. I know you're probably thinking, “obviously”, or not 🙂
The thing about saving: it's comfortable and it's an automatic. Saving is one of those topics that was introduced to us from a young age if anything was introduced to us in the form of money management. Did you earn an allowance? If so, did you save the allowance you earned from chores and sock it away in your porcelain piggy bank or did you spend it? Did you earn money from working and stash that money away or did you run to the store and spend every penny? Either way, it's not about whether the money was saved or spent, it's the mentality around what you're exchanging in ‘saving' or ‘investing'; spend to earn a desired return. Think about returns as results.
The thing about investing: it's riskier. With many investments there is no guarantee or a return. Whether this investment is into the stock market, real estate, personal development, professional development, an education, produce from the grocery store, the boots you were going to wear everyday (in order to amortize them of course), the trip to St. Tropez you've been counting down for (it could rain), and the list goes on.
On the other hand of risk, the return on any of your investments could be astronomical and you could easily 10x or 100x your return; meaning whatever you invested, you're earning a multiple amount back from it in excess of what you initially invested. I.e. you invest $1000 into a product, service or advice and 30 days later earned $5,000 from that one piece of advice. You 5x'd your investment across 30 days. Not bad, if you ask me. You aren't earning the same type of return when you're saving.
Why you get to save: saving a portion of your income is healthy, just like donating a portion of your income to charitable organizations (on an annual basis). Savings are ‘safe' and should you need to tap into that ‘safe money held in savings', it's there. Saving money has no risk, aside from the risk of not appreciating because it's sitting dormant. The upside is that there's money there when you need it. Some people will only save in their lives and never invest, and that's okay. Everyone has a different level of risk; part reality, part choice.
Why you could stand to invest: multiplying your investments of time, heart, self and – MONEY. Money doesn't equal happiness though it's one damn legitimate medium and vehicle to freedom. The freedom to do more of what you love and live life on your own terms equals freedom, and if that comes from well-thought investments, you'd be crazy not to consider those that best serve you.
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