There is a big difference between savings and investments, however most people do not recognize this difference. Savings are usually that account you have in your bank that your manager said all the good things about it on how they are insured by the government, how you can easily access your money and all the other beautiful advantages you have. That is indeed true, but if you are willing to accumulate wealth in the long run, than savings are probably one of your worst enemies. And we are talking in a time of a controlled inflation, imagine what would happen to all that money that is safe-guarded in savings if, by accident, inflation soared.
Suppose you earn 5% a year in your savings account, what would happen if inflation soared to say, 7% year? Do you know the answer? That is right! You WOULD lose money! At the end of that year, you would be -2% less rich. G-R-E-A-T! I believe you should, from now on, stop calling savings investments because they are not.
Investments are something different.
In order to accumulate enough wealth so you can retire at a decent age with a decent income you need to start saving and investing now. I am not saying that you should not put any money whatsoever in your saving accounts. That is not the case. You can and it is often a good idea to do it so, but I recommend you after saving all that money, put aside some time to study and search for different kinds of investments, ones that will really make you rich in the long run. A good choice might be going to your local bank and asking your manager what he would recommend for your current financial status.
Guidelines to a prosperous retirement
As a general rule, try to save from 10 to 15% of your income to put as deposits in either, savings or investments account. That will depend on your risk-taking level and other options that you might have available at the moment. Also, try to have an emergency fund covering from three to six months of your monthly costs. That way, if something happens you will have something to pay your bills while you search for a new job.
Start early and take your time to study the right investment for you. Investments are not dangerous or risky, they CAN be but that doesn’t mean that they necessarily are! If you take your time and study thoroughly, you will find that there are plenty of low-risk options that could yield greater return that just putting your money on a savings account.