Savings and investments are an integral part of financial planning. Be it for individuals or an organisation, no financial planning is complete without looking for ways to save and invest money. The two words are often used interchangeably in day-to-day conversation. Even though they go parallelly, they are technically not the same.
Savings are a part of the money that you have in the present and you decide to put them aside for specific or general use in the future. However, Investment-Related Savings is the special savings made to invest later. There are various schemes available to save as well as invest your money. Not only by the private entities but also by the government to promote healthy financial planning amongst individuals. If a person does their research well, they will realise that there are many plans that not only help them save money but also save them taxes on the return.
Before understanding the relation between investment and savings, it is important to understand the two terms individually first. Investment is buying stock, bonds, mutual funds, real properties etc hoping that the assets would generate returns on the invested money in the future.
If you are someone who invests their money, you would know investment and savings are interdependent factors of a cycle. For most individuals, the money they invest is the money that they have saved over a while. And once it starts generating returns, they reinvest that money instead of keeping it idle.
Investing in real properties in some cases can start for as low as 5% of the down payment.
Before investing any savings in real estate, having a proper financial plan is very crucial. A proper analysis of the budget, the percentage of the budget you are comfortable putting down and the impact it would have on your long-term financial goals are some of the most important questions to be answered.
Also, keep in mind your near future monetary needs. Make sure that you won't require the money you are about to invest in the near future. As this might not only lead to disruption of your financial plans but would also lead you to suffer losses and penalties.
As real estate investments are a huge financial commitment, It is also advisable to first compare the different options available to invest in real properties before actually putting in any money. It would help you choose a financial path that aligns with your goals in the least expensive way.
