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What is savings?

Savings is the balance left over after an individual's consumption needs are met. Another definition is the money you put aside for future...

What is savings?
Yazar: Charles Porter

Yayınlanma: 3 Eylül 2022 17:06

Güncellenme: 24 Mart 2024 23:02

What is savings?

Savings is the balance left over after an individual's consumption needs are met. Another definition is the money you put aside for future use instead of spending it immediately.

The need to save is inevitable due to possible future economic difficulties, future anxiety and scarce resources. For example, postponing an impulse purchase helps you decide whether it is something you really need or a waste of money that you will regret soon after you buy it. Savings are held in the form of cash or cash equivalents, which are not exposed to any risk of loss but also come with minimal returns. However, savings can be increased through investment, which involves putting money at risk. Sometimes the words savings and investment are used interchangeably, such as saving for retirement in a PPS scheme, but this usage is technically incorrect. Pension "saving" is more accurately called investing, because the money deposited in these accounts is used to buy securities such as stocks, bonds and mutual funds. When the money is invested, it carries the risk of loss, but that risk generates positive returns over time. Savings, by definition, are "safe" from any potential loss. Furthermore, savings are highly liquid and ready for immediate use. Investments, on the other hand, must first be sold and converted into usable cash. This can take some time and you may incur transaction costs.   Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!
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