Save or Invest - Why Saving Will Not Make You Wealthy!Save or invest? The question of the hour. You hear all of the time, "Put your money in savings until you retire!" But is savings actually saving you money, or is it losing you money. The concept of saving and investing are on the same premise, but it is all about the velocity of money. If your money is moving slowly, it is not helping you become wealthy. If you money is moving faster, you will build your wealth very quickly. I am going to give you two examples. One is a savings program and the other is an investment. One is moving quickly and one is not. Knowing which one will make you money quickly will show you why you should not waste your time saving money. It has to do with Return on Investment. Savings Say you have your two thousand dollars in a standard savings account earning maybe two percent interest or in numeric terms .02 annually (APR). The bank usually calculates that interest over a period of twelve months or one year. That is only 0.00167 per month or less than a half a percent. Anyway, in one month, your two thousand dollars may yield $3.34 (three dollars and thirty-four cents). Your Over the term of the savings, your total earnings are $40.45. You return on investment is 40.45 divided by 2000 which equals two percent (2%). Investing Now say you invested that two thousand dollars in the stock market, buying 2000 one dollar shares of company X. Company X has a really great year and their stock prices soar up to five dollars per share by the end of the year. You sell your shares and turn your two thousand dollars into ten thousand dollars, or eight thousand dollars of profit. Your return on investment is 8000 divided by 2000 which equals 400 percent! Much better than the two percent you earned with your savings account. So, save or invest? Which of the two was working faster for you?
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