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Save or invest my money? what should be done

What is savings?

Savings is the part of your income that you decide not to spend and reserve for a specific goal that you have in the future, explains BBVA.

To save you must have control. Among the advantages that it leaves you are not destabilizing yourself in the face of an unexpected event, you do not rely on credits; you are ready for the future and it helps you achieve your goals, states the bank of Spanish origin.

Savings relate to the purchase of goods or services in the short term, and the money is deposited in a piggy bank, account or bank promissory note; in direct CETES, you insert a batch or keep it under the mattress, explains Banxico Educa.

What is an investment?

When you invest your money, you give it up for a while to achieve medium and long-term goals, and to generate profitability.

By investing your money you protect it against inflation, which sounds good when the consumer price index in Mexico was 8.16% in the first half of July, according to data published by the Inegi.

To choose the best investment instrument, there is an indicator called Banco de México total annual profit (GAT), where you can compare the performance offered by different instruments.

You must take into account that the amount you are going to invest should not be part of your livelihood, nor jeopardize your financial stability. The most advisable thing is that you don’t touch that money for a period between three and five years.

No investment is risk free. In that sense, the riskiest instruments are those that offer the highest returns. So, you have to take your risk tolerance into account; If you are very stressed or impatient, it is better to choose low risk options.

It is also important that you do not put all the marbles in one bag, that is, diversify. Currently, there are various investment funds that offer you a diversified portfolio.

Make sense of your investment

“Saving without a purpose is like a race without a goal,” says Banxico Educa, which is why he recommends that you have motivation to save or invest.

Define something you want to buy or do and, based on that, figure out how much money you need to make it happen; it sets a deadline – day, month and year – for compliance.

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