If you're just starting to build wealth, it is important to consider whether you should save or invest your money. Saving offers safety, while investing provides the opportunity to grow your money faster over time. Both options have their advantages, but which one is the best fit for your situation? In this article, we'll discuss the differences between saving and investing, the available options, and how you can make a positive impact with your money.
What is the difference between saving and investing?
The main difference between saving and investing lies in risk and return. Saving is generally safe because you're placing your money in a savings account with a bank, often at a fixed interest rate. You know exactly how much interest you'll earn, but these rates are often low nowadays. Investing involves putting your money into things like stocks, bonds, or crowdfunding projects. This offers the potential for higher returns, but also carries more risk, as the value of your investments can fluctuate.
What types of saving options are there?
There are several ways to save money, each comes with its own pros and cons:
- Regular savings account: This is the most common way to save. Your money is always accessible, but the interest rate is often low.
- Deposit account: With a deposit account, you lock in your money for a set period in exchange for a higher interest rate. This can be a good option if you don't need immediate access to your funds.
- Goal-based savings: Some banks offer goal-based savings accounts where you save for a specific purpose, such as a vacation or a new car. The interest rate is similar to a regular savings account, but it can help you save more consistently.
What types of investments are there?
Investing can be done in different ways, depending on your risk tolerance and goals:
- Stocks: Investing in companies by buying shares. This can yield high returns over the long term, but there’s also a risk that the value of your shares will decrease.
- Bonds: These are loans to governments or companies that pay periodic interest. Bonds are considered less risky than stocks.
- Crowdfunding: Investing directly in projects via crowdfunding platforms. On platforms like Lendahand, you earn interest on your investment while making a positive social impact with your money. There is risk involved with crowdfunding investments. On Lendahand, the risk for each project is clearly marked stating the credit score of the borrowers.
- Mutual funds: With a mutual fund, you pool money with other investors. A fund manager invests this money in a mix of stocks, bonds, and other assets. This offers diversification and reduces risk, but also involves fees.
- ETFs (Exchange Traded Funds): These are funds that track a specific index, such as the AEX or S&P 500. They offer broad diversification at relatively low costs and are often seen as an accessible way to invest.
How can I make a positive impact with my money?
If you want more than just financial returns, you can choose to invest your money in impactful projects. Impact investing, like offered by Lendahand, allows you to invest in sustainable and social projects that improve people's lives. This means you not only earn financial returns, but also contribute to a better world by supporting clean energy or microfinance, for example.
Why invest with Lendahand?
Lendahand offers a unique opportunity for beginners who want to invest and make a positive impact at the same time. With a relatively low starting amount of €10, you can invest in projects that promote sustainable development and receive up to 8% interest per year. The platform is transparent about risks and expected returns, allowing you to make an informed choice. Additionally, you’re investing in projects that improve the lives of people in developing countries, delivering a double return: financial and social.
Take your first step in investing with Lendahand
If you’re unsure whether to save or invest, it’s important to consider your financial goals and risk tolerance. Saving offers security, while investing provides the potential for higher returns, especially when you choose impactful investments. At Lendahand, you can easily start investing in projects that benefit both you and the world.
Start investing with Lendahand today and make a difference! Click here to create your free account.