SHARETIPSINFO >> Articles Directory >>Understanding Savings and Investments in Share market
Savings and investment are two very common words not only in the field of mega finance but also in the world of a personal finance plan. As regards personal finance plans, the meaning of the words savings and investments can vary with time and age. Now let us understand the meaning of savings and investments and try to get to the core of these topics. You should try to have some time in understanding savings and investments
In the simplest of layman terminologies, savings is nothing but the remainder of your total earnings after subtracting the total expenditures.
Savings = Total Income or Earnings – Total Expenditures
The practice of saving is a very good and rewarding habit. The more you save, the more you have earned.
In addition to having a better future guaranteed, saving also turns out to be extremely rewarding in case of medical and other emergencies.
There are various types by which you can save. They are:
- Saving money by means of a pension plan
- Saving money by means of a deposit account
- Cutting down on expenditures, especially those with recurring costs
- Saving money by means of a profitable insurance policy (that is one which guarantees growth of your capital), etc.
Now you must also be aware that there is a difference between the terms "Saving" and "savings." Saving is nothing but an increase in your assets, which is an increase in total value. On the other hand, savings implies a fraction of your assets, generally a deposit in a savings bank account, or the whole of your assets. Saving means a planned action happening over time, which can keep varying. On the other hand, savings means something which exists at any given time only.
Now, it is safe to say that saving is intertwined with investment. One can save money on buying services and/or commodities and possibly invest it on resources necessary to have a steady income in the future. Saving can therefore be very important in order to expand and grow the accumulation of fixed capital at hand. This will definitely contribute to financial growth and stability of economy.
So now that we have understood the concept of savings somewhat in detail, let us now move over to the concept of investments in the share market.
In the simplest of layman terminologies, investments is the agreed money or “capital” set aside from your savings, in order to buy financial instruments (stocks, bonds, securities, etc.) in the hope of gaining from the interest, an income or other means of returns like the increase in the value of the instrument purchased. Investment also has its share of risks, such as the loss of the investment capital. You should vehemently analyze the investment scenarios as well as the profit and loss factors before you make any investment as otherwise this can be highly risky with respect to the maker of the investment (investor) as the probability of losing your money is definitely not within your total control. The visible difference between apprehension and actual investment can be unnoticeable. It totally relies on the investor’s mental capabilities that are if the goal is for loaning out the commodity or instrument to another investor for economic reasons.
The intent of making an investment is by far one of the most important decisions in the world of finance. So it is utmost important that before leasing his money into the open market, an investor fully understand the risks and the overall pros and cons.
Now, investments can be of several kinds:
- Investment on financial instruments – stocks, securities, savings certificates
- Investments on land and property (real estate)
- Investment on the running of a business firm, an organization, etc
Thus far, we have learnt the definitions of savings and investments. Hopefully, you might have gained from this effort of understanding savings and investments. You should always make the best use of research of the various stocks in the market. By doing so you would be able to gain the ultimate profits from your invested money in the stocks.
For more articles click here
To Know About our Packages Click here
Click here for Indian stock market tips