The Fine Line Between Savers And Investors
We come across numerous terms in our regular life and in the current market scenario savings and investment have become household terms. However, there is little to no knowledge about the difference between the two. It is used interchangeably and is not even understood clearly by all savers and investors.
Any lay man will comment that the person who saves is a save and the person who invests is an investor. It is probably the crudest definition of all, and while this cannot be termed as completely incorrect, it hardly encompasses the full meaning of the two terminologies.
The social structure and types of savers and investors
If we look at our society in the financial spending terms, we will find three types of people broadly. The first type consists of savers who remain away from any sorts of investments whatsoever. They will never invest in anything and will save whatever they are not spending. The second type comprises of those who save a lot and then invests with a savings mentality. It is the fear of falling back and losing that drives them towards investment. The third kind comprises of those who invests to succeed in wealth creation.
Understanding the types
Most of us will fall into one of the above categories. While they look different from one another, there are underlying similarities that go unnoticed and hence not understood properly. All the people in any one of the groups work hard top earn a living and pay off any debt. Whether, one believes in investing or not, does not change this. Each one of us also diversifies in terms of finding earning sources as well. The only point of difference is the way we invest. But when it comes to hard work and diversifying, all are the same.
Change perspectives one at a time
Perspective about savers and investors is crucial to know how to get rich. Those who get rich work hard too. But that is not physical work at all times. Working hard is actually using intellect to leverage others into using their energy to create wealth for us. The perspective is very important as you will need to understand those who are working for you so as not to make the mistake of taking them for granted.
Debt is the next thing we need to change our perspective about. To most of us, debt is a scary proposition. However, leveraging debt to create wealth is what we need to learn. We need to learn how finances work and use debts for our benefit.
Long term investment does not necessarily mean saving
For most of us long term investment is investing in Mutual Funds and Bonds. However, there is another option as well which is not much discussed. It is known as Hedge Fund. When we invest in Mutual Fund we are putting our own money into the market and trying to increase it. It is a form of savings and cannot be termed as investing. Hedge Fund, on the other hand, is using other people’s money to create wealth for us. This is investing.
Once the concept of savings and investing is clear, make your choice. Take the smart decision of turning into an investor.
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