Financially, it makes sense to have a savings cushion no matter what your present condition is. You should save money for a rainy day and for major life events like buying your first house and paying for college, as well as for the possibility of losing your job.
But, after you have amassed a sufficient quantity of savings, you should begin reallocating part of your savings to investment if you really want to maximize the amount of money you may earn for purposes such as accumulating wealth or preparing for long-term objectives like retirement.
Savings vs. Investing
While theoretically distinct, savings and investment are inextricably linked. As a rule, people wait to invest until they have sufficient savings in their bank account. To save is to put something aside for later use or financial planning. When you invest, you spend a resource (often money) with the aim of gaining a financial return or appreciating value. Hence it should always be saving and investing, instead of savings vs. investing.
Why is it important to have a savings account first?
Among the primary approaches to ensure a comfortable future financially is to set aside money each month. By setting aside funds, you may protect yourself from future hardships and secure yourself a better quality of life.
You may avoid a lot of potential snags in life if you start saving money regularly. It may be relied on in a time of crisis and help guarantee that your family will be okay if anything bad happens to you.
Some examples of savings that you can try are opening a money market account, retirement accounts, or an emergency fund. You can then use this in paying the down payment for your real estate investment.
Why Should I Put My Savings into an Investment?
A sound financial plan should include a strategy for saving and investing money. Although savings may serve as a safety net and help you reach your short-term goals with the help of the federal deposit insurance corporation, investment can help you reach your long-term financial objectives by providing you with the opportunity for better long-term returns.
If you are having second thoughts about putting money saved into various investment vehicles, here are some of the reasons why investments help you achieve a secure financial future:
Investing is much more than just putting money away for rainy days.
In a nutshell, saving is putting money away now to utilize later. In economic terms, this is referred to as “foregone consumption.” Simply put, you don’t blow all your cash at once but instead, put some aside for rainy days and some personal circumstances.
Starting an investment portfolio with savings makes sense since it gives you access to the capital you need to buy various assets. But, investment takes things a step further by providing substantial rewards that may be used to accomplish individual objectives.
Helps to combat inflation.
You should invest your funds for several reasons, but one of the most important is protection against inflation. Price inflation during a certain time period is referred to as the inflation rate. Broad price increases or the overall rise in the cost of living are two common indicators of inflation.
For a fast illustration of inflation, consider the pandemic. In order to examine how costs have evolved throughout time, we may compare them before and after a pandemic. Due to the continual price increase, the value of our money is decreasing.
Investing in assets that may not only produce greater income returns but also offer the possibility for capital growth can help you earn positive real returns over the long term, which is returns that are higher than inflation.
Now that the rationale for investing one’s earnings has been laid forth, keeping one’s money in a bank is no longer an attractive option. With the help of investments, your money may increase with increasing interest rates and help you keep up with inflation.
Earn some additional passive income.
If you put your money into reliable investments, you may increase your monthly income. You might supplement your normal income with the money you earn from your investments. You may use the funds for immediate expenses, or you could reinvest them to increase your wealth via compounding.
Purchasing an affordable condominium unit like Asterra is one of the most productive methods to generate a steady stream of income.With its strategic location near famous landmarks and tourist spots, you can easily convert your condo unit into an Airbnb rental home.
Promising long-term returns.
When you invest, instead of putting your money to bed for the day, you put it to work in the hopes of a higher return down the road. Cash, fixed interest, real estate, and stocks and bonds are various types of investments that usually provide varied rates of return which is relative to the risk of the investment.
Historically, ‘growth’ assets like stocks and real estate have provided the highest average returns. Long-term capital appreciation is possible, and so is a steady income stream from investments like dividends or rent payments.
With Asterra’s goals for sustainable development through its mid-rise condominium buildings, you can gain more in the long run through its energy-efficient home solutions as well as eco-friendly spaces.
You can get better returns.
If you want your wealth to grow, you need to put your money to work in a way that will bring in a high rate of return.
If the rate of return is high, your earnings will be high as well.
Investment vehicles often provide the potential for better rates of return than savings accounts. This means you need to start investing your money if you want a shot at a greater return. You may increase your future returns by purchasing assets, such as real estate, and then reselling them at a profit.
Your Asterra condo unit also excels in this aspect as it is located in the provinces included in the urban agglomeration or the continuous urban expansion of Metro Manila. Apart from this, the condo complex is also situated at the heart of the town or city, giving prime convenience and accessibility to the unit. This means that if you invest now in Asterra, there is a pretty big chance for you to witness the appreciation of your property value in just a couple of years!
Achieving your early retirement goals.
People in today’s age are planning for a shorter work life and an earlier retirement and reap their retirement tax benefits. Those who want to start families in the near future should also pay particular attention to this.
If the point of investing is to increase your wealth at a quicker clip, then you should be able to accomplish your objectives more rapidly. Before you reach your 40s or 50s, you may be able to spend more time relaxing and less time working, depending on the amount and kind of assets you have.
A good place to start with retirement savings is throughout your working years. Spread your retirement account savings over a variety of investments such as stock market, bonds, mutual funds, commodities, real estate, and stocks and bonds of corporations. After reaching retirement age, you may continue to use the funds from these assets to fund your living expenses.
Getting an avant-garde investment suitable to the demands of our contemporary society and the future is definitely a great way to start your financial independence and financial security.
Achieve this by investing in an affordable condominium unit like Asterra that values sustainability through its eco-friendly and energy-saving facilities. Discover our functional and innovative amenities and visit us at our Laguna and Cavite sites.