If you’re trying to decide whether you should save or invest your money, you need to have a look at your goals and your financial situation. There are so many options when it comes to money, whether it’s building up your savings or where and how to invest your money – do you want short-term savings or long-term investment?

Putting money aside bit by bit so that you have some put by for when you need it either for a big purchase like a holiday or to cover yourself when emergencies crop up is relatively easy to do, you don’t need to learn much apart from looking into which savings account will earn you the most interest.

Investing needs a little more work, choosing the right thing to invest in such as property or stocks can be tricky and risky, however, if you choose right, the rewards are great, and your money will grow.

If you’re not sure how much you spend every month, then use a Budget planner to get a clear picture of your finances and work out where you might be able to cut costs. It’s a good idea for everyone to have an emergency savings fund and if you can then a general rule is to have three months’ worth of living expenses saved up in an instant access savings account. This should include rent, food, school fees and any other essential outgoings which will give you financial security if something goes wrong. Once you have your emergency fund, try to save up at least 10% of your earnings each month if you can afford to and set yourself savings goals. Put away enough to buy what you want whether it’s a deposit for a house, your dream wedding or around the world trip – don’t think anything is out of reach, it all adds up. You can then start to think about investing your money.

Investing your money really depends on your goals, are they short, medium or long-term goals? Do you need/want money in the next five years? Five to ten years? Or is it more like over ten years?

If your goals are short-term then generally, saving into cash deposits, like bank accounts are the best option. If you’re investing, the stock market might go up or down in the short-term, and if you invest for less than five years, you might make a loss.

For the medium-term, cash deposits are still a good option but investing could be the answer if you’re willing to take a risk to achieve a higher return on your investment. If your goal is to buy a house in six years time and you know you’ll need all your savings as a deposit and don’t want to risk your money. It might be safer to put your money into a savings account. However, your savings will still be at risk from inflation if the interest you earn on your savings doesn’t keep up with the rate of inflation.

However, if you can be more flexible and prepared to take some risk then investing your money will see a higher return on your investment than would be possible by saving alone.

If you’re looking at saving for your retirement or something else further away then investing is probably the way to go. Inflation can seriously affect the value of cash savings over the medium and long-term, but the stock market tends to do better than cash over the long-term providing an opportunity for higher returns on any money invested over time. You can also reduce the risk when you invest by spreading your money across different types of investments.

What should you invest in?

When it comes to investing there are plenty of different types of thing you can put your money into such as gold, real estate, bonds, and stocks and there are positives and negatives to all of them.

Gold is a commodity so if you’re investing in gold, be aware that the price may drop. Remember that commodities are usually just betting.

Investing in housing and real estate is a good idea. Try and get a house that is 50% off of what it’s worth so you can make a decent return. However, it might be easier to invest in the stock market and make the same returns or better rather than having to have loads of rental properties to take care of. There are other options such as HDB BTO 2018 which are built to order flats in Singapore. Choosing locations which are going to grow or up and coming towns or villages is a really good way to see your investment increase too.

Safe and low-risk bonds are another option, however they might only give you a 3% return on your money over multiple years meaning that when you take your money out of the bond, you’ll have less buying power than when you put it in because the growth rate could even keep up with the rate of inflation.

A mutual fund is a pool of funds from many investors that are diversified into many different things including, stocks, bonds, and other assets. These are operated by money managers who invest your money for you and attempt to get good returns. This sounds great. However, there are many downsides such as they don’t actually make positive returns, but you still have to pay the money manager a percentage of your money.

If you want to put some more time into it and get it right then learning about the stock market and how to invest in individual companies or stocks is a really good way to make money. You’ll need to study it and learn how to invest, but if you start by looking at companies that you like and you understand how they work, then you can make better returns in the stock market and retire a lot faster than with any other investment type.

Finally, things that you should avoid investing in include a new car, your TV, a sofa or a bed. These items lose value over time from you owning them are not considered investments.

When it comes to both saving or investing, you shouldn’t do either if there are more important things you need to do with your money – for example, if you are in debt then sorting that out needs to be your priority.

You could do both saving and investing depending on your different goals, so it’s really important before you do anything that you make a plan. Establish what you want, write it down and work out the best way to get each one.

Before you do anything with your money though, shop around, do your research and take your time. Find out about the different banks and savings accounts they offer. Do your research on anything you want to invest in. Find out as much as you can, ask around, speak to other investors and educate yourself – you will thank yourself later.

As for saving, do it anyway. Get your emergency fund set up, so you feel secure and ready for anything. You never know what’s around the corner, so it’s good to be prepared for any eventuality. Set your goals and work toward them, remember it all adds up, and nothing is out of your reach.