Money and capital plays an important role in life and although it is said that money canâEUR(TM)t buy happiness, it surely does buy everything else. We live in a materialistic world where we need money for fulfilling a large number of our needs and requirement. Except certain things, almost every other thing comes at a certain cost. We need money for buying both necessities and luxuries and therefore the cloth we wear, food we eat, phone we use, house we live in; all has a certain monetary worth. Thus looking at the importance of money and the role it plays we must make all possible attempts to save it and rather increase it.
Difference between Investing, Spending, and Saving
Although investing may look like spending, there is a vast difference between investing money and spending money. Investment is the buying of assets and properties that appreciates in value, thus providing the investor with dividends along with total ownership of the property where as spending is buying commodities whose value depreciates after possession. Savings on the other hand is nothing but saving your capital without allowing it to grow that would otherwise happen in investment. Although savings is not considered as investment but it can imply as a start towards investment. Many investors first save a considerable amount of money before investing it in a specific sector. The spectrum of investment is very wide and you can earn returns through investment simply by depositing money in a bank, by establishing a business, or by spending money in buying, stocks, gold, property, that can generate income.
Although it may sound easy and profitable but building investment and making it a successful endeavor requires a lot of knowledge in the specific field, along with patience and perseverance. Knowledge about the market value of the product you are investing in current time and determining its worth in future is crucial. Risk management is another important factor that one must consider before making an investment. Money lost in investment is hard to recover and therefore investing need following of precautionary measures in order to make it lucrative. While investing in stock market, investors must make sure that the rate of returns is high and they can again reinvest the earned dividend which will help in generation of more capital for the investor. Investing in real estate is also practiced widely and is considered a safe mode of investment as the demand for land is always on the rise. Likewise investment in rare elements and materials that are high on demand such as gold, diamonds, platinum, etc. is also considered profitable.