Every successful investor must begin by understanding the difference between saving, investing and speculating. If you get those confused you run the risk of losing a lot of money.
Let’s start you with saving. Saving can be defined as the process of setting money aside in order to make a purchase a short time in the future typically under three years. The most important element when it comes to saving is the safety up your money. You don’t want the value of your savings to fluctuate because you’ll need all a bit to make your purchase. There are several option available to help you save money savings accounts money maker accounts and certificates of deposit for example. Unfortunately, as a trade-off for protecting your money saving typically pays interest at a rate that is just a bit higher than inflation.
If you want to earn more than that you’ll have to look to investing. Unlike saving investing is a long-term process. It often involves committing a portion of your money to owning a share of a business. With the expectation that you receive a higher return than inflation. The most important factor is the growth your money. And there are many ways to invest in stocks bonds and real estate being the most popular however once again there’s a trade-off. While investing typically offers better returns than saving it also carries more risk as the value of your investment bounces up and down. At least, when looked at in the short. Term to be a successful investor you must invest your money for at least three years. That’s because over longer periods the value of your money will appreciate enough so that even if the value of your investment bonds over a short period of time. It will still be higher at the end of the period then it would have been if your money had been sitting in a savings account but what if you need to grow your money quickly.
That’s where speculating come in. Speculating involves putting your money at risk with the hope that you will earn a higher return in a short period of time. Day trading is a good example speculating where stock trades are opened and closed in a period of minutes or hours. Speculators can win big but they can also lose everything. So to sum up, they can also lose everything so to sum up save to protect your money in best to grow your money speculate to gamble your money.