Is It Better to Save or Invest Money?

If you have some spare money then you may wonder whether it will be better to save or invest it Some people are not really sure of the difference and it is wise to understand this before you make your decision.

A savings account is usually offered by a bank and building society. You deposit the money with them and they will give you interest on it. If you have an instant access account you can withdraw it whenever you want to. There are savings accounts where you can give notice to withdraw money or you keep the money in the account for a fixed time period which will pay a bit more interest to you.

An investment is very different. You are actually buying something with the money, perhaps a share of a business, some art or a house. That item will fluctuate in value and therefore the value of your investment will change. You may receive a return on the investment such as dividends or rent or you may just gain from the increase in value of the item. However, with an investment there is a risk that the value may go down as well as up. In the short term there is more chance of the value going down which is why it is wise to always plan on holding an investment for a long period of time.

Whether you choose a savings account or an investment will very much depend on you, your attitude to risk and your personal circumstances. If you only have a very small amount of money, then savings will be the only option for you as investments usually require either a large lump sum or a regular monthly payment. Also when you take out an investment, you will need to be prepared to invest the money for a long period of time to give it a chance to increase the value. This means that you will be tying it up for at least five years if not decades. This means that you will need to use money that you are happy to not use for a significant period of time.

There is also a risk factor with an investment that the value may fall and you will not get back what you invested. In some cases you may get nothing back at all or even have to pay out even more money. Usually the higher the risk you take, the more money you can potentially make, but you may lose everything. If you take a lower risk you are less likely to lose money, but you may not be able to gain so much either. How much risk you are prepared to take will depend on you and your personal attitude towards it. There is almost no risk with a savings account so you may just prefer to stick to those rather than investing. However, some low risk investments may tempt you if the potential return is significantly higher than you could get on a savings account. Some people will spread the risk by having some higher and some lower risk investments so that they can have a chance of getting a high return but also have some which they know they are less likely to lose.

Before you make your decision as to whether you want to save or invest your money it is wise to investigate the different types of savings and investment options you have. There are lots of different types and they all vary in the return that you are likely to get from them as well as the amount of risk that they have. This means that you will then have all of the information that you need to decide which type is the best for you. If you do not have time to do a lot of research, then it could be wise to speak to a financial advisor and find out more information from them. They will have an in depth knowledge of all of the options available to you and will be able to explain all of your options to you. They will also be able to then find out from you how much risk you are willing to take and recommend the right place for you to put your money based on that.

The best ways to cover the cost of an Emergency

From time to time we will all have emergencies where we suddenly need money to pay for something. It could be a leaky roof, broken down vehicle or an unexpected bill. Wherever it comes from and however much it is, it can come as a shock and you may find yourself searching for ways to find the extra money that you need to cover those costs.

There are a number of different options that we should all consider to see which one might be the best for us. The first is to use savings that we might have. It can be difficult using savings for this sort of thing. It is likely that you will have spent a lot of time saving up the money and taken a lot of effort. You might feel that you do not want to be spending this money on something mundane. It may even be that you are saving up for something specific and so do not want to wait even longer to have that because you have had to use some of the money. However, if you decide to borrow the money instead of saving, it could take you longer to pay more into the savings account as you will have to be making loan repayments as well as paying interest, which will be costly.

If you have a credit card or an overdraft then you may be tempted to use these. They are quick to use as you will have already organised them with your bank and so if you need the money really quickly, they can be very convenient. It is worth noting though, that if you need cash and draw it against a credit card, it can be extremely expensive. Also that because there is no regular repayment plan with these sorts of loans, it can mean that they will hang around for a long time as you may not be motivated to pay them off. This means that they could be really expensive as you could end up paying a lot of interest on them. Therefore you need to decide whether you really want to borrow money in this way and if you do, whether you will be able to pay it off early. There are other ways to borrow which could be better, such as a personal loan, which could be cheaper and may not necessarily take too long to organise.

If you do not have a good credit record then you may be tempted to take out a payday loan as this will allow you to still be able to borrow. These can be useful and many people use them successfully but you do need to be very careful with them. You will have to pay back everything that you have borrowed, plus the interest and fees in one lump sum payment when you next get paid. Therefore you need to make sure that you will have enough money to pay it all back or else there will be additional fees to pay.

It could be worth trying to earn some extra money to cover the cost. Perhaps ask for an advance on your salary or see whether you can put in some extra hours to get some money that way. It can be worth thinking about whether you have anything that you can sell in order to raise some extra cash as well. This can be a way to raise money really quickly if you sell on social media or other online sites, particularly if you keep your prices low. You might have clothes, accessories, homewares or other items that you no longer want or need and you can sell to raise some. It could be that you will have enough to get you out of trouble.

Another option could be to borrow some money from friends and family. This may not be an option, it obviously depends on how much money they have and whether they can afford to lend any of it to you. You will also need to think about whether you are happy asking them for money and whether you think that it might have a detrimental effect on your relationship with them if you do ask for money. Think about whether they might expect you to pay it back quickly or whether they might want some interest on the money or not.