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Saving vs Investing: the Cost of Inaction
Savings and investing are two wealth-building concepts that are required for a financially secure future.
When you save money, you are simply preserving its value. The money you save today will have the same purchasing power in the future, but that is it. Inflation is constantly eroding the value of your savings, which means that the longer you wait, the less valuable your money becomes.
The first drawback is that inflation directly harms our savings. Prices around us generally get more expensive whilst our savings get left behind. A reduction in purchasing power directly relates to a reduction in living standards. The second drawback of savings is opportunity cost. This is the return we forgo by not investing our money, and instead, take a smaller reward in the form of interest.
The first drawback is that inflation directly harms our savings. Prices around us generally get more expensive whilst our savings get left behind. A reduction in purchasing power directly relates to a reduction in living standards. The second drawback of savings is opportunity cost. This is the return we forgo by not investing our money, and instead, take a smaller reward in the form of interest.
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