Apart from saving and earnings, investing is also an important element in the process of financial planning. Saving is the tool that allows accumulating funds for later use. However, saving money doesn't result in accumulation of wealth. The savings need to be invested in financial tools to get healthy returns in the future. It would be better to state: ‘A penny saved as well as invested is a penny earned
Money makes money
Now, here the question arises, why should savings be invested? Well, the answer is simple; money is the only thing that can become a strong base of earnings for you. The people, who defer consumption and invest the amount, can expect to receive a greater amount than what they invested in the future. However, the people, who spend more than their income, can never accumulate wealth in their lifetime.
Saving and investing allows the people to keep a track of their expenses. They never spend more than they earn, and hence, always have their finances under control. They spend wisely which allows them to save ample money for making investments.
People do savings for their future as it is a fact that no one can work for life long. There comes a retirement time when people use the saved money. Savings and then investing money to accrue wealth provides financial independence to people.
Investments have got two main objectives. The first one is to get good returns and grow wealth, and the second reason is to avail tax benefits. Invest the money and get the tax benefits every year. Moreover, there are several tax-saving instruments available in the market suiting individual needs.
Investment helps you to get returns on your savings, and this accumulated wealth can be used for fulfillment of personal goals. Investing becomes an interesting activity when you have an objective at back of your mind.