Savings. Savings Refer To The Income Not Spent Or Deferred

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Savings Savings refer to the income not spent or deferred consumption. In economic terms it can be equated in the following way: Saving= disposable income – consumption Within personal finance, the act of saving refers to the preservation of money for future use. Saving, therefore, is the decision to defer consumption and to store this deferred consumption in some form of asset. Common examples of saving are putting money in a piggy bank, storing a certain amount of cash at home for sudden requirements, keeping money in a bank account and so on. Motives for Saving The famous life-cycle model of Nobel laureate Franco Modigliani asserts that people save to finance their retirement, and they spend their…show more content…
In an economy not experiencing growth in technology or population, it is expected that in the long run, the country’s net saving will be zero. An economy’s long run savings rate of zero does not mean that no one saves. Rather, it means that the positive savings of those accumulating assets exactly balance the negative savings of those consuming their assets. For growing economies, long-run saving is likely to be positive to ensure that the capital accumulation keeps pace with the strength of workers. Investment To invest is to allocate money (or sometimes another resource, such as time) in the expectation of some benefit in the future. In finance, the benefit earned from investment is called a return. The return may be in the form of capital gain or investment income, including dividends, interest, rental income etc. Investment generally means acquiring an asset, also called an investment. If the asset is available at a price worth investing, it is normally expected either to generate income, or to appreciate in value, so that it can be sold at a higher price (or both). The two main aspects of any investment are time and risk. The sacrifice (of consumption) takes place in the present and is certain. But the benefit is to be received in the future and tends to be uncertain. In some investment options the time element is the dominant attribute while in some other the risk element may be more dominant. Almost everyone
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