Topic: saving vs investing - minimalism vs frugality (Read 355 times)

personally, I would prioritize both. We know that the benefits of saving are many, in fact it will be very useful in unexpected times, such as needs that we suddenly have to fulfill, and other problems. Besides that, saving has very good benefits for the future. Many people have proven it.
Unfortunately, saving alone is not enough. We have to put aside a few percent of the income we have to invest. This will make us continue to improve our financial situation. In fact, with investment the goal of financial freedom can be fulfilled. However, I think investing without saving is lame. I often find this in people who suddenly need emergency funds, where they are forced to sell their assets because they don't have the savings to meet these emergency needs.

But I know several people who pile up cash they can withdraw immediately with no time delay just for the purpose of hunting down unexpected investment opportunities and I know it did work out for them quite frequently since they know the markets very well that they are operating in. Having cash available right now for assets of an asset class that somebody knows very well with respect to unexpected short-term opportunities can be a good strategy. Not locking up the funds for 2% interest can pay even if somebody foregoes the potential interest for quite some time if an opportunity then arises that saved the buyer 20% of the market price because of sudden fire sales from somebody who is about to go broke.

There are plenty of examples that I know about when people told me they kept plenty of cash in the bank in order to be ready once this or that opportunity pops up out of nowhere. There are certainly financial set ups that could be arranged with banks in other ways, but there are people who operate with cash in the bank they can withdraw any moment. Savings for potential investments in unpredictable opportunities so to say.

too many people.. even in this topic.. keep thinking the only two options is move from extreme spender, no money to save.. to extreme investor put all spare money into investing, have nothing to save

1. by this what i mean is the same person saying all his income goes to spending and nothing left..
2. then says not to save for incidentals but then go to extreme investing to grow money

the issue is by investing every spare penny, you then fear/panic/avoid taking funds out of investments because:
a. investments might be in a bear trap causing losses if sold
b. fear of missing out the next bull
c. imagining the next, next bull in 4-8 years

and so they have no rescue pot in either 1 or 2 nor between the transition from 1 to 2. meaning when surprises happen. they are in trouble. with no spare money in either context

the point of saving is not wealth creation. nor is it to use for luxury spending in a couple months. its to isolate a small pot of money in easy access form. to rescue you so that you are not panicking

its to save you from having to sell investments in bear times. its to save you from using credit in overspending times.
once you have the rescue pot of easy access cash.. THEN put later income spare cash into investments. knowing you dont need to mess with investments when incidents happen

i know people keep thinking they should lock up their rescue pot into investments too. but that is stupid as people then panic by having it locked up and can los more value than inflation, if made to sell at a loss during a bear correction

Financial management is necessary but getting job is not in the hand of an individual because now everyone is in Struggle to find a job but no one can find their desire job due to limited seats. First thing is that if a person has a job then he should manage his salary according to his uses and also think about saving and investment.

Some people have no planning of using money but they rushes towards investment as a result of which their investment remains incomplete and they take out their invested amount for emergency due to lack of financial management. If someone is not able to earn enough money then suitable option is to do part time job as it will gives you extra money for saving and expenses.

if you are using money market/stocks accounts and CD's you are not "saving" you are "investing"

savings are suppose to be the easy access funds where you cant lose money by withdrawing immediately..
investing however has the risk of panic selling at a loss..

so if you need to have money to rescue you from unexpected incidents. save it..
then with other income you get you can invest that knowing you dont need to quick dip into investments. because the savings will save you

if you are wanting to put money aside for later PLANNED events/items later on..  where you are not looking to spend it on emergencies but want to accumulate some increases whilst not spending it. then yes invest it on some short-mid term investment plans, where some accounts lock funds up for 3-6-12months offering X% fixed high yield interest. but these are treated as investments(wealth creation) not savings(rescue funds)

Not all money one puts aside is earmarked for emergencies, just saying.  A person might save for a car, a house, a new dildo, whatever.

The word "saving" has at least two meanings, and why you're equating the meaning equivalent to "saving someone from drowning" is beyond me.  If I put money aside to buy something I can't afford right away and don't want to finance, that isn't saving me from anything except acting with financial stupidity, e.g., paying for that something with a high-interest credit card.

By the way I just wanted to mention that now is a pretty good time to save money if you trust banks/brokerages, because you can find money market funds and CDs that are paying interest rates that beat inflation.  I agree that that's not wealth creation, but at the moment the stock market is sky-high and there's no telling what other investments like bitcoin are going to do.  It's kind of nice to have money on the sidelines earning 5%+, just waiting for good buying opportunities.

Investment decisions should be approached with careful consideration and avoid making hasty choices that could lead to financial hardship. Investing carries risks, and there is possibility of incurring losses. By only investing an amount that you can afford to lose, or by using extra funds specifically designated for investment purposes, you can minimize the potential impact on your overall financial well-being in the event of unfavorable outcomes.

Having a backup plan in place provides a safety net and peace of mind that allows you to navigate unforeseen challenges or setbacks with greater confidence. This could involve setting aside emergency funds or diversifying your investments to spread risk across different assets or sectors. Taking the time to research and educate yourself about various investment opportunities can help you make informed decisions and identify strategies that align with your financial goals and risk tolerance.

A matter of choosing which is consistent and which is convenient. Saving is for sure speaks for consistency and assurance that you will have an amount to use in times of emergencies. However, investment is with convenience, in particular with making the value or worth of an amount bigger than what you have alloted and also over time. Difference is with the presence of risk. Now, everyone has a choice; some people find it better to have savings than to engage with investments and to some is the opposite. Both would work well if things are planned. Again, both are good but depends on how the individual will make things work. Some people are into savings but cannot manage preserving the amount because of circumstances or just personal wants. With investments, some people are not minding the risk or often disregarding the possibility of loss.

That's true, which is why it is always advisable to have a backup plan in place before investing your money. Don't make hasty decisions without careful consideration. Only invest an amount that you can afford to lose, or invest only if you have extra funds available to cover any potential losses you may incur during your initial investment.

To be honest, I don't think it's necessarily a dilemma. I try to have a bit of savings in fiat for emergencies, and I agree that doesn't require accumulation over a long period of time, but then I also try to treat and accumulate BTC as savings, actually. So I try to set some BTC aside, but I do use those funds when I need to (or even when I just want to do something special that requires more spending that usual), so it's not exactly like hodling, but more like a non-fiat savings account with a bonus of long-term appreciation of value.

frugalism is surviving on the cheapest things or going without

minimalism is deciding whats important that brings long term benefit and worth the expense as it brings good vibes to your life if planned and positioned to maximise its effect, and cut out the other stuff that is not worthy of being in your life

Frugalist and minimalist lifestyle to me is pretty much the same, they both are cutting their ties to earthly desires and seek less amount of things to clutter their home, so I have a hard time finding their difference, maybe if we're talking about minimalism versus miser then that's a more apt fight because they've both have a difference that's striking.

When it comes to savings versus investing, I'd rather go for the investing because that way even if there's risk, my money will grow and in my opinion, investing is the evolved version of saving because you're not just letting your money stagnate on a piggy bank somewhere, you're making it work for you so you can reap the profits and still have some money left that's still saved and can still be used for emergencies.

Investing is indeed more profitable than saving, but we also have to know the risks, saving has almost no risk, but investing has very big risks, but it will all be worth it with all the possible benefits that can be obtained.

Of course, when compared, investment is much better, but we also have to study it before deciding to invest in order to minimize risk.
There are many things that need to be prepared before deciding to invest and these steps will determine the investment we make.

Investing is not as easy as imagined, we have to study it first to know the advantages and disadvantages or risks. In general, investing is more profitable than saving, but it also carries greater risks, until the capital runs out. Therefore, risk management is required for investing. However, saving is also not worse than a consumptive lifestyle, considering that the money will run out without a trace. Therefore, as a young person, don't be lazy about learning about investing

that only happened with investment that has significant risk though but with investment like buying gold or something of lesser risk no need to be cautious whether we gonna lose money after all we won't and even if it did its because the value of that commodity is getting down and we don't lost that much amount of money anyway.
just like bank deposits there's reason why they are so small in apy because the investment itself is quite secure, its just that people don't really like it because the interest only enough to cover for inflation.
but for investment like crypto that are quite volatile, and also quite risky but also have significant APY and easily make profit out of it it does make sense indeed to think about the strategy and only use money we can afford to lose.

I can't believe that there are people that are taking it more than the literal of living life frugally. I know that because I've been living frugally but I don't forget to give some rewards to myself if I think that it's fine in doing so and it's not going to constraint any of my budget. But I just can't those people that are coming to their terms that they live frugally in a sense that they're affecting their health, mental, physical and any other concerning matters. Because I think that I've watched a family that have been using the same water for the one that they swam on and for using the dishes.

I agree but there are people that can't just take risks and have their investments even if you have told them that we all have to take risk for us to gain something.

It's part of life; in fact, it's better to take risks in an investment or business than to do nothing. At least you have the chance to change everything in your life, but when the bad part happens, it's up to you to decide how you will cope. Will you just be disappointed and sulk forever? Life is a continuous challenge; don't expect that investing in or starting a business will guarantee you a better life. So instead of being disappointed, learn from that experience so the next time you engage in an investment, you know what to do and not do. I get it; it's hurtful and very devastating if you lose money, especially if that is your last money or hard-earned money, but what can we do? We can only move forward and try again. Because if not, then you are wasting your time just to feel disappointed and sulking.

It is not mandatory. However, many people, even those who are not capable, try to invest their little money with the hope of having a better life for their family. Then, if their investment fails, they will be disappointed and lose confidence in investing. This can lead to a negative impact on their future investment decisions.

We won't always be healthy, we won't always be young, and we won't always be able to continue working to earn as much money as we need. There are times when we will just lie in bed sick, and there are times when we are old and weak, so there are times when we no longer have enough strength, energy and ability to continue working and making money. And if this is not prepared right now, then when we are old or when we fall sick it will only be a hassle for other people. So this is where it is important for us to have savings as well as investments, so that at least when we get old or when we fall sick, we won't bother other people too much. Investment is a guarantee for the future, while savings is a guarantee when we are faced with an urgent situation, and savings also function to protect our investments so that they are maintained. Therefore, while you are still young, while you still have health and opportunities, earn as much money as possible and when you are old, let that money work for you through the investments you make.

yep which is why its advisable to have savings first.. to have the easy access rescue pot you dont want to lose to stupid gamble decisions*. as the safety barrier.. to cover the events where money is needed

investments is then the secondary event which to use excess funds, you are less emotional about due to having the savings rescue pot.

you are then less likely to panic when it comes to investments*..

the mindset is if the money you dont spend which you want to invest would have just been spent on frivolous stuff thus a loss anyway, you might as well aim it at investing to potentially increase wealth, still in the knowledge you might also have made bad judgements by spending it before. thus less emotionally attached.

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i personally think of excess funds as:
money IF used for a luxury car just to show off for others benefit that still ends up turning to rust, just like an inexpensive car does..
money IF used for luxury food.. it would have become a toilet flush the next day, just like home cooked food,
money IF used for luxury homes require higher ongoing maintenance, landscaping, heating, bills, taxes, .. a cosy home is better

so living within your means can keep you from over-extending yourself and avoid incidents and money troubles.

thus i dont panic when investments yo-yo short-mid term. i dont need to touch it short-mid term. because if any real world incidents happen i have the easy access savings to cover that. so i am more free to then invest without the risks/fears.

..
when people decide to go full-anal frugal and live like a hermit crap, delaying living comfortably within means and instead surviving below comfort, below basic means.. they then get emotionally attached to the investments and more likely to make mistakes short-mid term*

*mistakes like still FOMO buying near new ATH, mistakenly thinking the price will "to the moon" forever and never come down

be cautious with your money but not emotional to the point of making mistakes due to excessive greed overtaking rationality, or panic causing you to sell at a loss