Short-term or long-term savings; which should you invest?

gboyinwa ajomale

October 16, 2017 11:38 AM

Some don't buy the idea of just keeping their money in a savings account with little or no interest on it. So they feel the need to invest it to yield profit.

Investing your income is a wise decision but which of a persons savings should be invested. The short-term saving or long-term saving.

Some people don't buy the idea of just keeping their money in a savings account with little or no interest on the savings. So they feel the need to invest it to yield more profit.

We all like the idea of getting more to achieve our goals faster.

But is it better to invest short-term savings or long-term savings?

It makes more sense to invest your long-term savings because the downside is less and the upside is great, which can be achieved if you stick and follow through your plans.

But with short-term money goals, probably you want to get a new car, it's not really worth the stress to invest.

There is too much uncertainty when it comes to investing short-term savings. The stock market is always unstable, so it is either you are gaining or losing.

The instability of the stock market makes it impossible to have control on the timing which now affects short-term plans.

But with a savings account, you know your money is intact and the exact amount you need and how much you have to save to achieve your goal.

There is also not that much of a difference when you invest a short-term saving. Since it is a short-term investment, the returns might not be as much as you think. It might just be a little above the amount you put into it.

No doubt you have more money, but there is no much difference.

ALSO READ: How to separate business and personal finance

Putting your short-term savings in a savings account is the best form of investment.

The only period short-term investments makes sense is if your time range is flexible. Take for instance your goal is to get a car in a year but you don't mind waiting another year or two, then you can invest your short-term savings because the upside can be more after two years or more.

You can also invest short-term savings when you have more savings than you need. Investing the money and still have a reasonable amount of money in your account, even if the stocks are not doing so well. If you can take the risk and it doesn't affect your day-to-day lives, then give it a shot.

Investing your savings is not bad, but it is wiser to invest your long-term savings, which would yield more in the long run.

gboyinwa ajomale

Enhance Your Pulse News Experience!

Get rewards worth up to $20 when selected to participate in our exclusive focus group. Your input will help us to make informed decisions that align with your needs and preferences.

I've got feedback!