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Importance of Investments

Pros And Cons of Savings

What are the Pros and Cons of Savings?

Pros:

1.Savings remain unaffected by any events of the economy. Since they don’t fluctuate in value, we can reach our goals as per a set timeline and a fixed amount.

2.Savings form the fundamental step of investment. If you don’t save, you won’t have anything to invest.

3.Savings can help us save for goals in the most disciplined manner.

 

Cons:

1.Due to inflation, the purchasing power of our money can fall over time. Therefore, saving is most suitable for short-term goals only.

2.Most savings plans do offer interest rates, but these aren’t high enough to counter the effect of inflation.

3.You have to save a large corpus of money to reach big goals, as your money will not be growing over time.

 

When should you save?

The pros and cons that we read above show that there are only specific circumstances under which saving money can be useful.

 

One should, therefore, save their money when –

 

1.They are saving up for a short-term goal which doesn’t require a large amount of money, like a vacation, etc.

2.They are building an emergency fund, or saving up for retirement.

3.They don’t have any urgent debt obligations.

4.They want to invest in the near future.

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