Generally, people assume that trading is the best investing option for one’s savings. However, when you will break down the meaning of three words, you will realize that they are not one and the same. In order to secure your financial future, you must engage understand the basic difference between the three. MAXX Markets will also help you in understanding, which one is better.
Savings v/s investing
So, what is the basic difference between savings and investing? Savings is done when you are putting money in your savings account or going for fixed deposits. This might not earn you big rewards, but it will ensure that you are not suffering any huge losses as well. On the other hand, investing involves risk factor.
As per MAXX Markets, investing is done for long-term for better gains. Generally, we save for emergencies or purchases or for that matter some holidays. There is a need to track our savings too. Sometimes a deadline or goal is attached to the savings. Therefore, if you have kids who will be joining college within a time span of 10 years, then education savings account will be of great help. This will ensure financial security at the time of college admission. You have already saved enough for your children education.
In simple words, MAXX Markets explain the difference between the two, saving is where you keep your money safe and investing is where you make money.
Though savings is the safest way, however, only savings won’t lead you to your retirement plan of child’s education plan. You need to invest as well because investment will earn you higher returns. Now when you are trying to choose between savings and investing, you will have to decide whether you are doing this for a short-term or a long-term.
If it is short-term, then savings will provide you access to ready cash, however, once you invest you will not be able to access the cash immediately.
Investing v/s trading
Investing and trading are two different approaches of the financial market. Trading is considered to be the short-term affair, whereas, investing is the long-term one. In trading, people buy stocks for a short-period of time, like a week or a day, but investing is done for a year or even more than that. Investing is not bothered about the short-term market fluctuations.
Trading is more of a quick decision thing where the traders sell the stock if they see the price has gone up. If you are planning to trade online then you must opt for the sites that are reliable and trustworthy such as B-Finance. On the other hand, investing is more of a compound interest thing where people hold on to their stocks over the years.
According to MAXX Markets, trading involves much higher risk as compared to investing because the buying and selling is done on the same day. If the stock you have bought is doing good, then it would earn you good return, but in case it fails to grow during the day, then you might suffer huge loss as well.
After comparing all, it will be fair enough to say, savings and investing is important to reach the goals that you have set for yourself and trading, if done in moderation can be useful too.