As the adage goes, "Know what you own, and know why you own it" can go a long way when it comes to growing your financial portfolio.
Knowing that there is a distinct difference between saving and investing can help you build and protect your legacy, but where do you start? Here are a few crucial things for you to know.
What is the difference between saving and investing?
Before we ask whether saving or investing is better, it is crucial to know the difference. Both tend to be used interchangeably but are very different. Saving is money that you put aside to use for things such as emergencies, and future purchases. You can access this money quickly with little risk and possibly gain a small amount of interest on it, depending on how much you have put aside.
Investing, on the other hand, is long term growth of your money. You may not have quick access to it, but the longer you leave it to grow the better returns you get. Investments can be in the form of buying assets such as stocks, bonds, real estate, and mutual funds to make your money work for you.
Things to consider before investing
Most people want to eventually get to a point where their money works for them. They also want to build enough savings to protect them and their family when they need it the most, but saving money requires that you have a constant stream of income.
This is where investing comes into the picture, however, knowing when and how to invest is crucial. Many people shy away from this option because it seems difficult to understand and requires you to be invested for the long haul, which means you won't see the results immediately. But, if you are in the finance industry that focuses specifically on investments, you will need to speak to a financial advisor.
Speaking to a financial advisor can help you avoid common mistakes such as investing in the wrong assets that make little returns or investing more than what you can afford in your financial situation. Thinking one step ahead is pivotal in making sure that your hard work does not go down the drain. Protecting your legacy for you and your loved ones even when you are no longer around is important. So how can you achieve this?
Where to start
Building something worthwhile tends to take time which is why starting small and slowly building your investment portfolio to protect your legacy is key. A good starting place is having:
Life insurance. No one appreciates an umbrella on a sunny day, except when it begins to rain. Life insurance is similar. While you may not see its immediate effects, it will come in handy for you and your loved ones when you need it the most. Think of it as a financial shield that gives you peace of mind knowing that should you pass on or fall critically ill you will be able to protect your loved ones financially.
Will. For anyone looking to build a financial portfolio, a will is a must-have. You can create a legally recognised will online to have control over your assets and who you would like to receive your investment payouts and assets.
It is useful when it comes to shielding your loved ones from the financial strain that comes with preparing for a funeral, giving you peace of mind.