Have you ever wondered what the difference is between saving and investing?
Saving is setting money aside in cash accounts (generally bank savings or cash management accounts) for immediate expenses, emergencies and short-term plans. The money earns interest, which is added to your assessable income and taxed at your marginal rate.
Investing is putting money into assets to grow in value, deliver returns and build long-term wealth and security. There is a wide range of investments to choose from, each with different features and benefits. Your age and stage of life will affect the investments you choose.
In other words, saving is for now, investing is for the future. Both are necessary for effective financial management.
If you’re unsure how much of your income you have available to save, it can be a good idea to plan a budget. This will tell you how much you spend each week or month, and how much you have left over to save or invest. Our handy budget planner can help you get your finances in shape.
Saving and Budgeting
By setting goals, planning ahead and being smart with your savings and debt strategies – you can actively grow your wealth even from a modest start.
If you’re just starting out as an investor, there’s a lot of information to absorb. This fact file defines and explores the pros and cons of each asset class, why certain asset classes are more appropriate for different types of investors and why no asset class consistently outperforms the others.
There are many types of investment vehicles to choose from, with managed funds one of the most popular choices in Australia. Here are some of the reasons for investing in managed funds, direct shares, bonds and exchange traded funds to help you work out which combination is right for you.
Many investors become concerned when volatility occurs in global financial markets – particularly about the impact on their superannuation and other investments. In times like these, it is important to understand the causes of market movements and how to minimise your risk.
When deciding which investments are right for you, it is important to understand the trade-off between risk and return and how to manage investment risk. A risk profile can help identify the type and mix of investments that will best help you achieve your financial and lifestyle goals.