Is it Safer to Invest Or Save?

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The answer isn’t clear cut. It really depends on your financial situation. If you need money quickly, you may be better off with a savings account. But if you have long-term goals in mind, you might want to consider investing. Not all investments have the same risk and potential returns, so choosing the right option will depend on your specific circumstances.

The first decision to make when deciding whether to invest or save is to set a time horizon. The more time you have to invest, the more likely it is that your money will grow and earn. This way, you’ll be ready to withstand market fluctuations. Generally, you should invest for at least five years. Anything shorter than that would be too short a time frame for investing.

Investments offer a higher return than savings. After accounting for inflation, the stock market has an average return of around 7% per year. With that kind of return, your savings will double in value every 10.5 years. However, there are two downsides to investing: you may lose money and your assets may depreciate in value.

Another consideration is how much you can afford to risk. You may be better off saving aggressively if you have long-term goals and an emergency fund. In such cases, the risk of losing your savings is small compared to the amount you could gain by investing.

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