1. What is the difference between saving & investment?
Many people view saving and investing as the same thing. Actually they are not. Saving is that part of your income you set aside to spend at a future date. Investing however, is taking your savings and making your money work for you by putting it in financial instruments or products such as shares, bonds, units, property and even term deposits.
Investments generate income for you. You may receive dividends if you invest in shares, interest from bonds or rent from property that you lease out. This is referred to as “income gain”. Your investment may also increase in value over time, allowing you to sell (if you were planning to) at a profit. Profit is referred to as a “capital gain”.
2. Why do you invest?
There are varying reasons why people invest. Let us look at a few: