In the first of our special #InvestorEducation series of #OutlookMoney, Rajat Mishra & Sampurna Majumder telling you the difference between saving and investing.
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00:00 Hello Sampoorna, I gather that you have been working for almost a decade now.
00:03 And you must be earning a huge amount of money.
00:05 So what do you do with your money?
00:07 Do you spend, save or invest?
00:09 So I am Rajat.
00:22 I am Sampoorna.
00:23 So today in the first part of our financial education video, we are going to tell you
00:28 and essentially what differentiates the two.
00:30 Saving and investing are the two terms that are often used interchangeably.
00:38 Saving is defined as the income left over after spending money from your disposable income.
00:43 So maybe you will be spending Rs. 5000 from the amount of the money you are earning per month.
00:48 So Rs. 5000 after cutting down all the expenses is called out as saving.
00:57 Investing is the process of putting money into an asset class
01:01 that can help you generate returns over a certain period of time.
01:04 However, if you keep the same money into a savings bank account,
01:09 your yields would be almost negligible.
01:12 You can choose to invest in various tools like mutual funds, SIPs, stocks, real estate,
01:19 even commodities like jewellery.
01:21 Savings are typically meant for meeting a small financial objective.
01:25 Suppose you want to go on a domestic vacation, suppose to Kerala and to Mumbai
01:30 and to buy a mobile phone.
01:31 These type of small financial goals are achieved through saving.
01:35 On the other hand, investment is meant for long-term financial goals.
01:39 Investing typically involves achieving long-term goals.
01:42 For example, planning for a child's higher education or for that matter, planning for your retired life.
01:49 Talking about the access to money, in the case of the saving,
01:52 you can withdraw any amount of money from your savings bank account at any point of time.
01:56 So there is no restriction imposed on withdrawing money at any point of time in terms of saving.
02:02 The first question that can pop up in your head is if you are saving or investing,
02:12 what are the risk factors involved?
02:14 If you are saving in a bank account, there are less chances to lose out on your money
02:17 because the risk factor involved in the saving is very less in comparison to the investment.
02:22 However, investing involves huge amount of risk and that depends on the kind of tool
02:28 which is often driven by market conditions.
02:30 When we are talking about the returns, one thing that we have to keep in our mind
02:34 that while when we are investing money, we are not getting much returns.
02:38 As in investment, you can get a huge amount of interest and benefits when you are investing.
02:43 In the saving bank account, if you will park a corpus in the saving bank account,
02:47 you will earn interest around 6%.
02:50 At last, saving is meant for small financial goals.
02:53 On the other hand, investment is meant for long-term financial goals.
02:56 But we would recommend you to save for a short-term financial goal
03:00 and invest for a long-term financial goal that would be of much use for your future.
03:04 First thing first, you need to identify your financial goals and then work accordingly.
03:11 For example, you are planning to take the trip to Disneyland.
03:16 For that, you need to save money so that you have access to it within a very short span of time.
03:23 On the other hand, if you are planning for your retirement, you need to invest
03:28 so that you can lead your sunset years with ease and comfort.
03:34 Now, it's up to you whether you want to spend, save or invest.
03:39 That's all for today's financial education. Stay tuned for more such videos.
03:43 Till then, keep reading Outlook Money and most importantly, stay invested.
03:47 invested.