Although these words are usually used interchangeably, both savings and investment are critical elements of personal finance but serve different purposes and starting early is a great way to set yourself up for long-term financial stability. Some of the key differences run around the Time Horizon of the investment as well as the Risk Profile.
Investing involves putting money into assets that have a potential for growth or income. Its usually done for long-term goals, like retirement or wealth accumulation. It carries some level of risk, but potential returns are generally higher than those on savings.
Investing in Unit Trust Funds
Unit trust funds use money from multiple investors to purchase interest bearing financial assets in order to generate a return on investment. This return is earned daily and distributed to investors monthly.
These Funds are ideal for investors seeking to preserve their capital, low risk and highly liquid investments, offering a return that beats inflation and is higher than that of bank savings and call accounts.
Unit Trust Funds offer several benefits including withholding tax exemption, liquidity, and compound interest ensuring a relatively high return on your investment.
Risk Profile
Unit trust funds OR CISs are licensed and regulated by capital markets authority together with the appointed trustees and custodians that ensure that there is efficient management and administration of investors money, but most importantly, Unit Trust Funds invest primarily in short to long-term fixed income financial instruments, for example listed bonds and treasury bills, bank deposits, all of which are considered of low to medium risk.
Get Hold Of Your Financial Future With Our Six Steps Financial Planning Process
We Guide You Through Your Financial Planning process and stay with you to the end to ensure that it comes to fruition. Together, we examine your current situation in terms of incomes and expenses, your aspirations, the resources available (Income streams) and develop a plan to achieve your current and future financial goals. Our 6 steps of financial planning process will help you get a grip on your finances and ensure future financial independence.
Write your goals and define your priorities.
What's important and what you want out of life. For example, how much inflation adjusted income will you need in your retirement or if you became disabled or a family member dies prematurely where will the income come from.
Identify the goals as short term and long term and determine if each goal listed is either essential, important or an aspiration.
Essential goals; must do. Saving for retirement, building an emergency fund,
Important Goals; Less critical but represent core values eg. Education, saving for home, down payment on debt, starting a business.
Aspirational goals; Anything merely nice to have. E.g. Second home, second car, big trip.
Discover your financial position.
Collect data on your incomes, expenses, assets, liabilities and investments. We also discuss your positive and negative investment experiences to understand your perspective. This information will be used to create a comprehensive financial profile and identify areas of strength and weakness.
Analyze financial Data;
The data is analyzed to identify areas of improvement and potential financial risk. This includes evaluating your income streams, expense patterns, investment portfolio and debt management strategies.
Developing a financial Plan;
Based off of your goals and financial data analysis, a financial plan is developed. The plan typically includes a budget, savings and investment strategies, debt management strategies, and risk management strategies.
Implementing the Financial Plan
Take specific action steps to achieve the identified goals and objectives. These may include adjusting spending habits, increasing savings, investing in specific assets or paying off debt.
Review your goals and portfolio periodically.
Modify your goals as your life circumstances or timelines change