Many times in our life, certain terminologies appear to be overlapping one over the other. While there exist huge difference when looked at in an in-depth manner, at the surface they look absolutely interchangeable. Two such words that are yet to be properly understood by most of us are Savers and Investors.
Ask a layman the meaning of these two words and he is sure to mock at you. For him he who saves is a saver and he who invests is an investor. While this appears logically perfect, a detailed understanding about what exactly savings and investments are will help us understand that there is a difference between Savers and Investors
The general tendencies pertaining to investments
We live in a society that typically has three types of people. The first one is the type who never believes in investing at all and does not do anything towards the same throughout their life. The second type of people is those who invest but with a savings mentality mainly due to their fear of losing out in life. The third type of people is the ones who invest consciously to win in life.
Changing perspectives need changes in understanding
While most of us fall in one of the three categories when it comes to investing, we have more things in common than we think. For instance, we all work hard. Even a person who does not believe in investing works hard for his living. We strive hard to get out of our debts. We diversify, in terms of earning money from various sources though not in investing the same. The basic thing that needs to be noticed however is what it really means to say ‘working hard and diversifying’.
Perspectives play a crucial role
When we say working hard, it just does not mean we should push ourselves hard physically. It means, leveraging our mental capabilities to find out ways for making other people work for us to make us rich. Making other people to work for us means using their energy and time in an intelligent manner. This may depend on the type of investments you make. Again, try to get a clear idea of what it means using other people’s time and energy so that we do not fall in to the trap of taking others for granted.
The next aspect which needs a perspective change is Debt. The very word debt sends shock waves through one’s brain. It brings about a jittery feeling in all of us. In reality, if we learn to leverage our debts to increase our gains, debts can do a lot of good to us. Learning how finances really work will help us leverage debts to our benefit. Do that and get benefitted
All long term investments are not savings
For many of us, Long Term investments mean investing on Mutual funds and Bonds. There is one more aspect to investing in long term which most of us are averted to go in for. It is called Hedge Fund. The main difference between Mutual Fund and Hedge Fund is the same as it is between Savings and Investments. He who wants to be a prudent investor will make the wise choice of using other people’s money, which is nothing but Hedge Fund. On the other hand, he who invests his own money in Mutual Funds can just be termed as a Saver and certainly not as an Investor
Now that you know the key difference between saving and investing, assess yourself to find out if you really are a saver or an investor