ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Saving provides funds for emergencies and for making specific purchases in the relatively near future (usually three years or less). Safety of the principal and liquidity of the funds (ease of converting to cash) are important aspects of savings dollars.

Detailed explanation-2: -Invest in long-term financial tools: When you save, it is also important to see your savings grow with time. Investing your money in a long-term investment plan can have many additional benefits. These plans offer a lucrative rate of interest that lets your money retain its value and beat inflation.

Detailed explanation-3: -Investments increase by generating income (interest or dividends) or by growing (appreciating) in value. Income earned from your investments and any appreciation in the value of your investments increase your wealth.

Detailed explanation-4: -The more you contribute towards saving and investing and the sooner you start, the faster you should build wealth. Also, don’t be discouraged if you’re just starting out, as long as you stick with it, compound interest will eventually work its magic.