Should you invest your savings to help your money grow or leave it collecting dust? This is a popular question circling the personal finance community on social media. Interest rates for even high yield saving accounts have been stagnant, the stock market has been booming, and inflation is making us all crazy. To the point of investing every dime, we have to keep up with inflation and these wild times. But is that technically a good idea? Is it worthless to save and smarter to invest your savings?
The Problem with Open-Ended Money Tips
On social media, you find a lot of interesting content, so much so, that I’ve even seen people say that you should invest your savings. This type of content is usually trying to be controversial to get clicks and views. But on top of that, it’s super misleading and missing a lot of contexts. It reminds me of a popular saying, “Jack of all trades, is a master of none”. But that’s actually only half of the quote. The full quote is “Jack of all trades is a master of none, but better than a master of one”. This statement as a whole means something completely different when you have the whole quote to digest. This is something that I think is missing in the finance space that’s, unfortunately, confusing a lot of people when they’re trying to put these sayings into practice.
Save with Purpose
This is why Instead of taking all of the financial advice that’s thrown out there I focus on my personal financial mantra. Which is save with purpose, invest with purpose, and spend with purpose. Because there is value in saving, investing, and spending. But you need to be clear on what that value is to you. Regardless of what people on social media are saying.
If it’s for your emergency fund, then you need to understand the value of having money set aside for unexpected emergencies. But also how much money you need to confront an emergency. If it’s for a vacation, a new car, or a wedding. You want to remind yourself of the value of accomplishing this goal and set a budget of how much you need to save to accomplish that goal.
Invest with Purpose
When it comes to investing, I have two mantras “invest with purpose” and “Don’t invest money that you need”. If you just have an extra $10K in your savings account that you don’t need.
Because you already have your emergency fund, you’ve paid off high-interest debt, and your sinking funds are on point. Then Yah, you should look into maximizing that money where it best benefits you on purpose. That could be towards your retirement, your business, your kid’s education, or even a brokerage account for day trading.
What We Don’t Ask the Rich
It’s important to understand that when you hear financial experts talking about “invest your savings”, this doesn’t mean that there is no value in saving money. Especially since most successful investors, entrepreneurs, and financial experts have large cash reserves of over a year. A lot of times they don’t share this, because We don’t ask about it. We ask about their investments, and their businesses, not their savings.
This is why you have to always remind yourself that saving, investing, and spending money isn’t a waste if you have a plan for it.
- Inflation and your savings – Market Watch
- Saving vs Investing – Well Fargo
- Short Term vs Long Term Savings Goals – CNBC