We have already commented in other blocks the difference between savings and investment. Investing involves committing part of your savings with the hope, but without the certainty, of obtaining a return in return. As there is no certainty of obtaining that profitability, investing implies risk.
You may ask, “Why to invest if it means that I have to risk my money?” Without ever forgetting this risk, an investment can help you generate more money than you could get by simply saving, and in less time.
Having more money is something we all want. Money opens the door to many opportunities and provides personal freedom to live as you want and take care of our loved ones. The investment makes this possible, but it is also increasingly necessary if you want to accumulate the necessary capital to enjoy a quiet retirement, without seriously reducing our lifestyle when you stop working.
Think about your current financial situation and where you would like to be in 5, 10 or 20 years. To reach that destination you could save little by little, within your means, and put the money in a bank account, deposit or other product without risk. It would be to follow a safe path, but these products usually pay a very low interest and could take a long time to reach their goal.
Investment paths have dangers. In case of bad weather, they can be closed and force you to stop or take a detour, or even go back beyond the starting point. But these roads could also make it possible to stop, arrive earlier and go further.
Investment is also a way to make your money work for you. Most of us have to work to get our income. If we want to earn more, we have to work more. But there is a limit of hours that we can or want to devote to work and not all jobs pay what we want. The investor has the possibility to earn money while sleeping, eating, going out with friends or spending time with his family. By investing we try to make our savings produce new savings without having to work more hours or look for a new job.
Smart and conscious investment can allow you to have more control over your finances and face your future with more confidence.
Investing is NOT a game
It is also important to be clear that investing, although it implies the risk or uncertainty of the results, does not mean playing at random. Do not confuse the investment with a casino game. It is true that there are people who invest based on intuition or feelings, or on the “hot” advice of the Internet, a co-worker or a family member.
The serious and responsible investor does not play with his money or the economic security of his family. You only invest when there is a reasonable expectation of profitability according to the risk you want and can assume. Only invest through authorized intermediaries and after consulting reliable information. Just invest the money that is not going to be essential in the short term for other obligations. And only invest according to your personal goals and situation.