More often than not, savings and investments have been slightly misconstrued to mean the same. But that is not true.

In Ghana currently, it is important to know the kinds of ventures and things your money should be used for to stay afloat and beat the storms of the macroeconomic environment.

Since saving is good, this article seeks to explore the importance of going the extra mile to maximize your earnings.

First of all, what are savings? Savings are a part of your income that you set aside and do not intend to consume immediately.
Most people decide to save a part of their income for various reasons, including contingency, financial independence, to be debt free, better retirement, and investment.

On the other hand, investments include putting your savings or money to work to earn interest and build wealth.

Even though savings can help you to build wealth, some factors, many of which are uncertain can affect the worth of your savings in the long run.

These factors include inflation, economic downturns, and other macroeconomic factors.

Inflation, for instance, is when the prices of goods and services increase.
Therefore, if you decided to save GH¢100 every month for a year since 2020, you’d have saved about GH¢1200 by the end of that year.

After a year or two, the worth of GH¢1200 may have reduced marginally.

But if this money was invested even at an interest rate of 10%, the investor makes profit and stays a step ahead of inflation.
Investments can also help one to enjoy and enrich purchasing power, build wealth both for the now and even for future generations, and have an early retirement among other benefits.

Investments also involve risks, and due to that, investors must be sufficiently informed about the type of investments they would want to venture into.

Investors are also cautioned to beware of “too-good-to-be-true” interest rates since most of these rates may pose some challenges later.

Also, investors must not put all their eggs in baskets; diversification is key to minimizing investment risks.



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