Saving and investment planning is aimed at managing one's financial resources well to achieve short-term and long-term financial goals. This is by systematically allocating funds towards savings for future needs while investing those savings to generate returns that build wealth over time.
Savings involve keeping aside a portion of your income for future use. Savings provide you with a financial safety net for emergencies, and funds for short-term goals. Savings can be achieved by putting money aside in a traditional bank account, an M-Shwari account, in a Savings and Credit Cooperative Organization (SACCO) account, a fixed deposit account, an investment club, Chama or group.
Investment refers to the allocation of funds into a financial asset with the expectation of generating a profit or return over time. Investing allows you to grow wealth over the long term by outdoing inflation and providing financial security. Some types of investment options include stocks, treasury bonds and bills, mutual/unit trust funds, real estate and other financial instruments.
Savings and investment planning requires taking into consideration your short-term and long-term financial goals. Short-term goals my include building an emergency fund, saving for down payment for an asset or a child’s education, while long-term goals would include planning for retirement or your legacy.
Considering your risk tolerance is essential as it helps you understand the level of uncertainty and volatility you can endure in choosing the suitable investment option that will meet your specific needs and objectives. Integrating tax-efficient strategies will help you minimize tax liabilities while you maximize returns. Make wise and informed savings and investment decisions.
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