Introduction
Money has been something that everyone in every country knows very well more than anything. Children learn numbers on the currency very fast and before you know it, they can name it. Money is the only thing that even a mad person knows the importance of it. No wonder Holy book said that it is power. In this post I'm going to highlight some point about money and why investing it is better than saving it.
- What is money?
- What is investment?
- Why is investment better than saving money?
What is money?
Whatever you give in exchange of good and services and it is accepted generally, it is recognized and centralized. Before coin and paper money, there is what we call trade by bata which is giving out what you have in exchange of what you need. That is the senior brother of money.
You need bread, you give casava or any other thing the person want. Life was good then until it becomes a challenge and the idea of coin came up. It wasn't easy again to carry this coin around in business. They are heavy and makes a lot of noise when you are running. In fact it is not easy to put in pocket or hold it in a purse. Men will understand it better as they don't carry bags like women. To make life more easy, in 1368 when the Chinese introduced paper money. Since then, it was wildly accepted and it is easy to carry around.
What is investment?
When I say she in investing so much time on that project. It means there's so much attention to it. Investment in the real world is the process of putting in your money in a business with the goal of making good returns after so many years. Not all, investment is using your money to acquire properties or shares that appreciate in value over time for example real estate, company shares or good crypto project.
You don't take out the money in a hurry, it could be 3 years, it could be 5 years or 10 years, all depends on what you invested on. You don't just sell without taking out good profit and reinvest the capital in another thing. That is investment.
Why is investment better than saving money?
Anyone saving money makes low profit or none with low risk. An investor takes a higher risk but makes good money over a period of time. The ability to grow money overtime by compounding is investment because you will reinvest it. That's how one can save for retirement and other projects you want to achieve.
Why investment is better than saving money
Saving money is safe and easy to access in case you need it. You can also save every little thing you want which is not enough to invest in business. Saving also give you hope especially when there is an emergency, you can easily break the box and take out your money to solve problem which may not be easy in investment.
In that case saving money is not bad at all. You can also use saved money for investment but let me share more with us why investment is the best. In compounding, there is power of 1x1=2x2=4x3=12 and the list goes on and on. Let's say you have okra seed 100 and decided to keep it well in a good dry container for as long as you want to keep it. What happens any year you want it, it remains 100 okra seed. Now imagine you planted it the first year, second year and even third year, you can agree with me that you must have sold baskets of fresh okra, feed from it and instead of just 100 seed, it must have increased to thousands of okra seed.
let's see another example on saving money, let's see in 1990, you saved N5m naira in the Bank and you want to take it back this December 2024 approximately after 34 years. Value of $1 in 1990 was like N21.00 or let's say N25.00. one good thing here is that, you will get back your N5m and some profit but what exactly is the value now. That's the question.
To get the answer, let's know the value of $1 now in Nigeria. It is about 1,500. If the owner, had invested that N5m in dollar then, it means that the money has grown more than 1,000% .
The money would have purchased 238,095. Now, let's times 238,095 by 1,500.
You can see that it is over N357m naira, which no bank will give you simply because you saved your money in the bank. When we say long term investment, it really worth it if nothing disrupt your investment. Paper money keep depreciating so keeping it somewhere without investing it is like keeping seed without planting it.
Conclusion
In all trying our best to invest why we save is the best way to go. It can be short term or long term investment. All has good reward. Before investing, make your research to find out if it is a good project with that you will reduce the risk that comes from investment.