Savings & Investment Planning for Beginners - YouTube

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Namaskar, my name is Mukul and you are welcome to the Asset Yogi

Friends, we are going to discuss a very important topic. The topic is quite simple

But because many people get confused about this, I have selected this topic

What is the difference between savings and investment?

Now people say if we should do more savings or more investment

There's a very big confusion in this. So in this video, we will see

what is the difference between investment and savings on four parameters

How much should you invest or save? And what is the purpose of both?

So keep watching the video till the end

So that you will understand this topic properly. Let's start.

You may have noticed whenever we talked about investment. Then we have

compared them on four parameters. So we will compare savings and investment

on four parameters. The first is liquidity

See, everyone requires cash.

Now if you invest then your money gets locked for sometime

So if you want some money in liquid form

i.e cash. Then you have to do savings

The meaning of savings is high liquidity

This means you can convert it immediately into cash.

That means you can deposit the money in a savings account.

If you are a small business owner or a business owner

Then your money can be in your current account

Or your money can be in short term FD

That you can withdraw immediately

Then they are your savings. On the other hand

If we talk about investment, your liquidity decreases there because your money gets

locked for the long term. If we talk about the examples then

You invest in provident fund

Sukanya Samriddhi Scheme. All these are dead schemes.

If you invest in mutual funds, real estate

Or you invest in stocks

Then your money gets locked for the long term

See if the stock market goes down

Then you cannot withdraw the money instantly

So some money should be in your savings

So that you can withdraw the money whenever you want

So we've discussed the first point, liquidity

Savings mean high liquidity

That means they can be converted immediately into cash

Investment means low liquidity. They are difficult to be converted into cash immediately

The second point is the period. If you need some money in the short term

Then you will put that in your savings. So what is the meaning of the short term here?

There is no definition of short term

But we can assume if you need the money within 2 years. Then that money should be in your savings

So as we talked about earlier

If you get your FD

Then if you have a short term FD up to 1 year, 1.5 years, or 6 months

Then you can get it encashed immediately

You can use that money in the form of savings

If we talk about the long term means if we invest some money for more than 2 years

Then we call it an investment which you cannot withdraw immediately

The third parameter is a risk.

When we talk about savings

Then invest the money where the risk is minimal

This means if you are investing in a savings account, current account, or FD

Then the risk is quite minimal there. You can withdraw the money immediately

And if we talk about investment then the risk gets increased there.

Money can be more or less in the long term. So this was the third parameter

The fourth parameter is the returns

So when there is less risk, if we talk about the savings then there is less risk

So the returns are also less. You hardly get some money in the savings account

So if we talk about the long term, your money will not grow.

But your immediate needs or the needs that are for less than 2 years

What can be the needs?

You want to go on vacation, you want to meet your regular expenses

How will the groceries come? There can be other expenses

Children's school fees, rent. This money comes from a savings account.

Or they can come from the short term FD

If you want to go on a vacation after a year then you can start saving some money

Let's say you get an FD for one year, consider it in your savings

So here the risk is decreased then the returns are also less

If we talk about investment

The risk is increased so the returns are also quite good

So you should invest some money for good returns

Now, what about good returns?

If we talk about any investment then it should beat the inflation

If the returns are not beating inflation then it means it is not a very good investment

So, to make a good investment

Make sure that you get good returns

And you can get them only when you beat inflation.

If the inflation is 5 or 6%

Then your returns should be at least 7,8%

They should be at least 14%, 15%

So we understood what is the difference between savings and investment

Now the question that arises here is that

How much to save and how much to invest?

We need some money to meet our regular expenses

Like paying rent and child's school fees, to get the groceries

We need some money to fulfill our wants like we want to buy a good laptop

We want to buy a good camera or we want to go on a vacation

We need some money for emergencies. For example

There can be an accident in your home or there can be a medical emergency

There can be job loss then what you have to do is

You have to pay attention to the savings and you have to create an emergency fund of 6 months

6 months means whatever is your salary

Divide the monthly salary by 6

And create an emergency fund. Don't think about any investment before that.

Once an emergency fund of 6 months is created

Then you can think of your wants

So once you've created an emergency fund of 6 months

After that, divide your salary by 50, 30, 20

You may remember we have done a video on the 50, 30, 20 rule.

You can watch it

Then also I'll tell you in short.

Your 50% salary can go to meet your regular expenses

You can save 30% of your income to fulfill your wants

This means you can buy a good camera

You can buy a good laptop

If you want to plan a good vacation

For that, you can start saving your 30% salary

You can invest the remaining 20 %

You can invest it for the long term. So when we are talking about saving

Expenses of minimum 2 years that you want to meet.

You should start saving at least that much money

How much you should do that? You should have 30% of your salary

to fulfill your wants. And you should invest the remaining 20%

Because I have talked about this in many videos

When there is a compounding effect then you can plan your retirement in the long term

Whatever your long terms goals are whether you want to do your children's marriage

You want to go on a vacation. You need investment for all these things

And where you can do investment? You can do it in real estate, some people invest in gold

Stocks, mutual funds. Some people invest in FD

And we talk about investment then if we get FD for 2 years or more

Then we will consider it in investment

If the FD is for less than 2 years then we will consider it under savings

Other than this, you can invest in a provident fund

You can invest in Sukanya Samriddhi Scheme

But whenever you are analyzing any investment then you have to remember one thing

As I told you earlier that investment should at least beat the inflation

You should get more returns than inflation

If the inflation is 5 or 6% then you should get returns of at least 8 to 13%

Other than that if you compare investment, then do it on 4 parameter

Liquidity, time period, risk, and returns

I have made separate videos on all the investing options

You can watch those videos if you want to know in detail about any investment

I recommend mutual funds and stocks because in long term you get quite good returns

You can return up to 14 to 15% every year

You will need knowledge for that.

If you want to start investing in stocks or mutual funds

Then you can contact us on our WhatsApp number

9292924848

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