Save or Invest? Answer is save and invest
I always was in a dilemma on whether to save or invest. I highlighted this dilemma in my previous post title “Save or Invest“. This dilemma was partially solved when I read the post titled “Save and Invest“. Financial researchers have always advised their clients to have a blend of savings and investments. This is because savings is considered to be a protection from the volatilities that our investments in securities are exposed to.
History and the Religious Flavor to Saving:
Our forefathers have been for years highlighting the importance of saving in gold. This was taken a step further, when festivals were celebrated by the buying of gold. This form of regular savings accumulated over the years and acted as a suitable protection against financial storms.
Importance of having a blend of Savings and Investments:
Barack Obama has been recently quoted to have said, “At the end of the day, the best way to bring our deficit down in the long run is not with a budget that continues the very same policies that have led to a narrow prosperity and massive debt. …. It’s with a budget that leads to broad economic growth by moving from an era of borrow and spend to one where we save and to one where we save and invest”. This is a classical quote from a great visionary that he is. The quest for optimum growth is the primary source of the invention of the various financial instruments we come across in our day to day lives. These include insurance, mutual funds, and even the stock market. Financial valuation has its source in mathematics and over the years it has become one of the primary contributors for the research in mathematics. These models have only one goal, i.e., optimization of these instruments to maximize their returns.
