Many Nigerians dont have the habit of investing but alot of nigerians like saving. Let us examine why you need to invest more than saving more.

Investing isn't simply a matter of throwing money around. It means we should be deliberate about how we apply our resources

If you restrict your expenses and keep the unspent money in your own custody for the purpose of accumulating it, is called saving money. Savings can be done at any age.

Setting aside cash and putting away cash are altogether various things, with various purposes and various parts in your monetary procedure. Ensuring you are sure about this crucial idea before you start your excursion to building riches and discovering monetary autonomy is indispensable.

Everyone needs an emergency fund, but for most people this should be between three and six months’ of expenses. Along with insurance, that’s typically enough on hand to react to the many common financial troubles, like being laid off, having an illness that prevents you from working, or facing an unexpected home repair. This is what we like to call your “Safety Cash.”

Saving is the safer route because the naira amount in your bank account won’t typically decrease unless you withdraw funds, but interest rates on savings accounts don’t allow your money to grow very quickly. Unfortunately, interest rates are often lower than the rate of inflation. This means your savings could lose purchasing power over time.

Investing money is the process of using your money, or capital, to buy an asset that you think has a good probability of generating a safe and acceptable rate of return over time. The goal of investing is to make you wealthier, even if it means suffering volatility, perhaps even for years.

Investing is buying assets such as stocks, bonds, mutual funds or real estate with the expectation that your investment will make money for you. Investments usually are selected to achieve long-term goals. Generally speaking, investments can be categorized as income investments or growth investments.

Whether or not it makes sense for you depends on your goals – specifically if they are long, short, or medium term.

Short-term goals - are things you plan to do within the next five years.
Medium-term goals - are things you plan to do within the next 5-10 years.
Longer-term goals - are ones where you’re won’t need the money for ten years or more.

When investing it is a good idea to consider if you would benefit from professional advice from a regulated independent financial adviser.

Investment starts only after savings. To invest your money, you need to focus on factors like risk, return, tenure, tax, and liquidity. It is better to start investing at an early stage of life. Once you start investing, the compounding effect starts appreciating your infused capital, gradually growing it day by day. Investment requires great discipline and patience. You can make an investment for short term, medium term and long term and also select the appropriate instrument as per your planning.

While investing, taking care of tax implications. Investment requires periodical reviewing of the portfolio as per the prevailing macroeconomic conditions. You can switch from you preferred investment assets in the future, taking into account alterations in your risk capacity and return requirements. An investor with a higher risk appetite can invest in the stock market whereas moderate risk takers can opt for mutual funds. Low risk taker can invest in instruments like bank deposits, PPF etc. The selection of the investment instrument boils down to one’s risk profile.

Which is more important: saving or investing?
Investment follows acts of saving. Unless you already own a huge amount of money, the only way to accumulate it is through saving. Once you have created a corpus, its value starts eroding due to inflation. Therefore to maintain or grow the value of your corpus, you must invest it in a higher return asset. We can say that without savings, we can’t invest, and without investment, we lose the value of saving. Hence both go hand-in-hand and are equally important.

Things to keep in mind
While you save, don’t ignore your important expenses just because you want to grow your corpus. Make proper provisions for all your necessities. Avoid unrealistic expectations from your investments – they need time to grow. Draw a proper plan to meet your short, medium and long term goals without impacting your day to day life. For proper guidance and better results, always consult an investment planner from time to time.

https://blog.investa.ng/why-you-need-to-stop-saving-and-invest-more/

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