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In life, everyone wants to be successful, no one wants to be poor in life and with the way things are going now in the world, it is necessary and important that people save and invest for the future.
Therefore, there are certain principles ( ways methods, laws, rules, regulations, techniques) that must be adhered to strictly in the areas of savings and investments to make man financially independent.
What is savings?
Savings refers to the amount of money left over after individual's consumer expenditure is subtracted from the amount of disposable income earned in a given period of time. It can used to increase income through investing in different investment vehicles.
Savings is also an amount of something that is not spent or used. It is the amount of money that you have saved especially in a bank over a period of time.
What is investment?
Investment is an assist or item acquired with the goal of generating income or appreciation in value. In Economics, investment is the purchase of goods that are not consumed today but are used in the future to create wealth.
Types of investment:
Ownership investment: These are investment largely referring to things like stock, real estate, precious objects and business investment in which the buyer actually own the assets.
Lending investment: As the name implies, this is where the investor serves as a bank. Essentially buying debt in the hope to and expectation that the debt will be repaid. Bonds, saving account, treasury bills and other securities are all lending investments.
Cash equivalents: These investments are as good as cash, it is very simple to liquidate them or convert them to cash. Money market funds are example of cash equivalent.
Types of savings/investment:
- Savings account
- Certificate of deposit - 5 years or 10
- Stock as an investment (share)
- Bonds - Government or companies
- Mutual funds - Banks offer this pooling of funds to invest in a larger company
- Real estate - Houses and lands
- Commodities e.g buying Palm oil to sell in future.
- Annuities - for insurance company
- Personal savings
- Cooperative savings
- Children and self education
Principles of savings:
- Grow your earnings: By this I mean investing the money you earn into something good that will yield interest. By that, it will grow.
- Spend less than you earn: Make sure you don't lavish the money you earn on things that are not necessary and important. Spend wisely.
- Invest to make your money grow
- Avoid debt: Try as much as possible not to owe anyone, be contented with what you have.
- Give: Givers never lack, apart from that, you'll be blessed by giving to people, if not now in the future. Cultivate the habit of giving.
- Take action
Thank you so much for reading and engaging my blog, I appreciate.
I am @Mhizerbee