Saving and investing are two terms we hear constantly. Despite this, many people are unaware of the importance of these financial habits. Although saving and investing are two different concepts, both are fundamental to achieve long-term financial stability.
We know how easy it is to spend our money on things we like, and sometimes we don’t realize that we are spending more than we can afford. But if we want to have a stable and secure financial life, it is important that we start saving and investing for the medium and long term.
Saving for the medium and long term is a tool that helps us prepare for the future and the unforeseen events that may arise. Therefore, it is the basis of any financial plan. A recurring idea is that we think of saving as a short-term practice, such as saving for a specific purchase. However, saving should also be a long-term practice. Saving regularly can help create an emergency fund, which allows us to have peace of mind in the event of any unforeseen event that may arise. On this same idea, it is important to see savings as an investment available at all times and to have it available to obtain security and certainty in the event of any contingency.
On the other hand, investment is a way to make our money grow in the long term. Investments can be in stocks, real estate, bonds, among others. The objective of an investment is to obtain a financial return on the capital invested. Unlike savings, investment involves risk, since there is no guarantee that a profit will be obtained. However, if a well-thought-out and diversified investment is made, it can generate a significant return over the long term.
One of the advantages of this model is that it allows us to have a gradual growth of our money. It is important to mention that, although short-term investments are preferred by many investors because of the quick profits they generate, they also involve a high risk of loss. On the other hand, long-term investments allow us to have a greater margin of error, since there is more time to recover from losses.
But it is always necessary to point out that every investment involves a percentage of risk, from which none is exempt. It is possible that we may not have a return on investment as high as we expected, or that we may even lose part of our capital. That is why it is essential to have a clear strategy that is appropriate to our financial needs and objectives.
But it is always necessary to point out that every investment involves a percentage of risk, from which none is exempt. It is possible that we may not have a return on investment as high as we expected, or that we may even lose part of our capital. That is why it is essential to have a clear strategy that is appropriate to our financial needs and objectives.
Sources:
– McGurran, B. (2023). How to Start Investing in 2023: A 5-Step Guide for Beginners. NerdWallet. https://www.nerdwallet.com/article/investing/how-to-start-investing
– Dierking, D. (2022b). Benefits of Holding Stocks for the Long-Term. Investopedia. https://www.investopedia.com/articles/investing/052216/4-benefits-holding-stocks-long-term.asp
– BBVA MEXICO & BBVA. (2023, 10 marzo). ¿Por qué es importante ahorrar? BBVA México. https://www.bbva.mx/educacion-financiera/ahorro/por-que-es-importante-ahorrar.html
