Saving vs. investing
Savings accounts, whether with a commercial bank, mutual institution or even the post office, have always been a reliable way for investors to enjoy a return on their money without losing sleep at night. Savings accounts have stood for stability and security, rather than volatility and uncertainty.
But today’s low interest rates mean that savings accounts only offer a meager return and don’t protect against inflation. Today, many savers are looking for other types of investment that can deliver a steady income and/or growth in their capital, without requiring that they take on more risk than they are comfortable with.
Whether your goal is capital growth, capital preservation, income or a combination of these objectives, there are many ways of gaining access to the investment market. The type of asset you choose to meet your investment goals will usually be determined by many factors, such as your general financial circumstances, age and attitude towards risk.
At first glance, risk may not seem desirable in a capital investment. However, you cannot benefit from potential capital growth or higher returns if you do not expose your capital to a certain degree of risk. The key to finding a suitable investment that will provide the desired level of returns is to understand the relationship between risk and return.
Whether you are planning for a more comfortable retirement, need to pay for holidays, a new car or educational expenses, or whether you are simply setting money aside for a rainy day, you no doubt would like your money to work as hard as possible for you. Your individual investment profile will define the path you should take to achieve these goals.