You know where you stand financially, you’ve made a budget and you’ve determined how much you want to save weekly or monthly for future projects. Is your project to buy a house, retire comfortably or pay for your children’s post-graduate education? Whatever it is, the way to make it happen is to invest for the long term.
The difference between saving and investing
Savings are the amount you are able to put aside, on a regular basis or occasionally, in a savings account. The money set aside is secure, but earns little. In fact, returns on savings accounts may not be high enough to allow you meet your long-term investment objectives. But in the short term, putting money aside in a savings account is an effective way to establish an emergency fund so you can be prepared to meet the unexpected.
For long-term projects, it might therefore be better to consider investing. Even though each investment has its share of risk, investments will generally yield higher returns than savings.
Not sure where to start?
Before making hasty decisions, follow this 4-step investment approach.
Step 1 – Define your investment goals: Which project do you have in mind? Are there more than one? Are they long-term or short-term projects?
Step 2 – Determine your investor profile: Are you a cautious or risk-tolerant investor? Before choosing your investments, it’s essential you determine your investor profile.
Step 3 – Learn about the various types of investments: Get an overview of the various types of investments available to you.
Step 4 – Select the investments that are right for you: Determine which investments meet the needs of your investment objectives and investor profile.
If you need help
The terminology used in the investment world can sometimes be challenging for new investors. See our Glossary of investment terms to make sure you thoroughly understand the contents of this section.