Savings vs Investment
Do you know the difference between savings and investment and why having separate accounts for both is essential? To get the most value for your money and to build your wealth successfully, read on to know why it is more beneficial to separate both accounts.
Savings vs. Investing: Understanding the Differences
Saving is the amount of money set aside for emergencies or money that you can quickly access. In case anything happens, the money will be your resources to survive. As advised by most financial advisors, we are encouraged to have savings equivalent to at least six months of our spending and financial commitments. This is what we call an emergency fund.
On the other hand, investment is money set aside in an investment instrument such as a bond, unit trust, or stock market with the hope of gaining returns. Usually, investments are for the long term, and each investment instrument has a certain risk level attached to it, determining the return level. As a rule of thumb, the higher the risk, the higher the return.
The significant difference between these two is that money in a savings account, or the safe deposit box should be the money we must have. In contrast, the money set aside for investment is the money that will be invested for a long term to allow it to grow via returns.
As such, some of us might find it difficult to invest as we barely even have money left in our savings accounts. Some of us simply leave our money in savings accounts because of the easy access whenever needed. But the thing about savings is that it did not give any return, so our money lost its value due to inflation.
As such, we need to invest our money. Still, investment is a bit scary to maneuver the risk and return, especially for those without knowledge and experience. Investment has it up and down; sometimes, we might lose our hard-earned money. It is also not easy to withdraw our money as most investments will require demand and supply before we can liquidate our investments.
However, do you know that you can taste the benefit of both worlds if you invest in fixed price unit trust fund offered by such as Amanah Saham Bumiputera (ASB)?
Fixed price unit trust fund is a unique instrument launched by the government back in the 1980s to encourage Bumiputera to invest. As of now, ASB remains the biggest unit trust fund in Malaysia, with more than 10-million-unit holders.
By investing in the fixed price unit trust fund, you will get to enjoy the benefits of both a saving and investment as it has unique features such as fixed price and high liquidity. Each unit is offered at a fixed price of RM1 per unit, making it a low-risk investment while high liquidity feature makes it easy to be withdrawn.
It is also quite easy to invest in the fund as it has a wide range of agents all over Malaysia besides the portal and apps, which allow us to invest online and automatically.
These unique feature makes fixed-price unit trust a unique investment vehicle and as such it should be the investment of choice to build our wealth. Why let your money sit in a savings account with low return when you have the option to invest your money in ASB?
However, one must remember that a fixed-price unit trust is not a savings account. Therefore, the money invested must be treated differently from savings accounts. Ideally, you must invest for a long term and refrain from withdrawing the money, so the money invested will enjoy the return and have the potential to grow by the power of compounding interest.
Getting started with investing is now easier with myASNB. For more details, visit https://www.myasnb.com.my/.