Traditionally, saving has been viewed as quite different from investing. In most savings alternatives, the initial amount of capital or cash remains constant, earning guaranteed rates of interest.
The capital value of investments can go up or down. Returns are not guaranteed. However, creation of money market funds and deregulation of the banking industry have resulted in a variety of savings options that earn variable rates of return.
Savings provide funds for emergencies and for making specific purchases in the relatively near future (generally within two years). The primary goal is to store funds and keep them safe. This is why savings are generally placed in interest-bearing accounts that are safe (such as those insured or guaranteed by the federal government) and liquid (those in the form of cash or easily changed into cash on short notice with minimal or no loss). However, these generally have low yields. Because of the opportunities for earning a higher return with a relatively small pool of funds, some financial experts suggest that savers consider slightly higher risk (but liquid) alternatives for at least part of their savings.
Saved money is insurance. It is insurance against risk, against losing your job, against having a major unexpected repair bill or medical expense in the family. It is the backbone of you and your family’s financial well-being. Saved money grants you financial security. And the more you save, the more financial secure and independent you will be.
The goal of investing is generally to increase net worth and work toward long-term goals. Investing involves risk. Risk of your stocks losing money, or even going bankrupt (Enron, MCI, the airlines, etc. etc.). Risk of interest rates rising, and bond prices falling. Risks of your broker swindled you, or coerced you though his sales pitch to buy speculative investments. Risks of the economy. Risks of a particular industry. Risk of losing your principal. Risk of losing it all, and then some (such as with margin calls).
Mutual Fund Basics - What is a Mutual Fund ? Types of Mutual Funds, What is Net Asset Value ?, History of Mutual Funds in India, How to invest in Mutual Funds ........ Check out
Stock Market Terms - Definition and Meaning
Stock Market Terms - Share Market Terminology - Investment Definitions, Financial Term Meaning A to Z
A - Active Share, Amortization, Application-Money Asset Coverage Asset Financing, Auction Market, Auctioning of an Issue, Automated Screen Trading (AST), Average, Averaging, Bear Cycle, Book Profit, Booking Profit, Broker, Book Value, BSE Sensitive Index or SENSEX, Bullion, Buy and Hold Strategy, Call Money, Capital Asset, , Capital Market, Cash Cow, CD or Cum – Dividend, Certificate of Deposit, Certified Cheque, Chinese Wall, Circuit Breaker, Clearing, Clone Fund, , Collection Ratio, Commodities Market, Commodity, Compound Growth Rate, , Correction, Cost-Benefit Analysis, Cover, Covered Call, Creeping Acquisition, CRISIL, Cum-Dividend or CD, Crossing, Cum-Rights or CR, Cumulative Preference Shares, Cyclical Shares - Daily Margin, Dawn Raid, Debentures, Defensive Investment, Defensive Stock, Delisting, Deflation, Delivery Order, Delivery Price, Dematerialization of Scripts, Depreciation, Derivative, Discounted Debentures, Discounting, Dividend Cover, Dividend Play, Dividend Rollover Plan, Dow Theory, Depository Receipt, Efficient Market Hypothesis, Eligible Securities, ELSS, Employee Buyout, Employee Participation, Employee Share – Ownership Plan, Equity Shareholders, Eurodollar, FIFO or First In First Out, FII, Fill or Kill Order, Fixed Income Investments, Floating Stock, Floor Broker, Floor Trader, FForward Dealing / Trading, Forward Delivery, Forward Shares, Forward Integration, Free Lunch Theorem, Free Market Economy, Front – End Load, Front – Running, Frozen Assets, Fully Diluted Earnings Per Share, Fully Paid Share Capital, Fundamental Analysis, Futures, Futures Contract, Futures Market Glamour Shares, Godfather Offer, Going Long, Going Private, Going Public, Going Short, Gold Certificates, Golden Handcuffs, Golden Handshake, Golden Share, Good Delivery, Good Faith Deposit, Graham and Dodd Strategy of Investment, Great Crash, Gross, Gross National Product (GNP), Growth Shares, Gun Jumping, Glamour Issue.Havala or Hawala (also, Making Up Price, Head and Shoulders, Hedging Against Inflation,Inefficient Market, Insider, Insider Trading, Insolvency, Institutional Investor, Intangible Assets, Interbank Market, Interest Rate Risk, International Finance Corporation, International Monetary Fund, Inventory, Inventory Turnover, Inverted Yield Curve, Investment Analyst, Investment Club, Investment Company, Investment Company Shares (Close – Ended), Investment Company Shares (Open – Ended), Investment Horizon, Investment Letter, Investment Trust, Investor Protection, IPO, Irredeemable Debentures, Issue Price.
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