A saving account is not an investment vehicle


Saving is the setting aside a portion of money from your income(s) therefore saving alone is not a money generating process. Just as the name suggests it is just the saving of money. On the other hand we have investing, which the process of committing money to the markets or a business with the hope that it will generate money. If the investment is successful then you will be able to earn extra money from your initial investment ( the money you committed).

Saving is not the same as important , but it is important for financial success.

Saving can never be considered as an investing vehicle. Let say for example you earn R 10 000 per month, and you were able to save 100% of your income for the next 12 months you will save in total R120 000. However if you invested that 10 000 each month and received an interest of 8% on that investment you would receive a total of R 136,159.25 after the 12 months. The end result  speaks for itself.

Does this mean that you should not save? No. Saving is critical and important. In comparison to investing saving has less risk. Less risk, is not the same as no risk. When you put your money in a saving account it is subject to inflation. Inflation has the potential to negatively  cause the value of your money to depreciate in value. Very rarely do you get a saving account that beats the high inflation rates. If you wish to learn more about inflation follow the link (). When you have money sitting in the bank it loses value, and also earns no money.

However , saving has other indirect monetary benefits. Saving is an aiding tool towards financial freedom. When you save money you create a barrier between yourself and costly debts. Also when you save you have some autonomy  when you purchase items, start a business  or  begin a new venture. This is because you have the money available and do not need to seek it from anyone else. This is why saving , even though it is  less exciting it  should not be ignored. Saving and investing should work as complimentary tools to help you achieve your financial goals. Just like investing, saving should be automated and prioritised as part of your financial plan. 

Learn how to do saving correctly following the link to learn more ().


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