News and Commentary

Where You Put your Money Matters By Robert Mark Weiss, CFA

Novice investors often use the terms saving, investing and speculating interchangeably.  However, there are significant differences between each of these approaches to wealth accumulation. Savvy investors will understand these distinctions and recognize when one strategy may be preferential to another.

Saving

The dictionary defines saving as preservation from danger or destruction. When applied to personal finance, it means the act of putting aside and preserving unspent income, often for future use. For example, you may elect to regularly put aside some of your earnings into a bank account or certificate of deposit (CD) the goal of making a big purchase in the future, whether it be a new car, a family vacation or a down payment on a house. Saving is generally a short-term strategy that offers access to liquidity and protection from negative economic influences.  However, that level of safety comes at the price of very meager returns, especially in today’s low-interest-rate environment, for which savings held in a bank are yielding less than 0.50 percent interest.

Investing

Making the decision to put money into the equity markets is one that should be made based on quantitative and qualitative facts and with the intention of long-term growth over a period of more than three years. Based on historic evidence, the longer money stays invested (in the stock market, bonds and/or real estate), the better chances it will yield a higher target rate of return than if those dollars had been sitting in a bank account. On the downside, the potential for higher returns in an investment also comes with higher risks of losses. A well-diversified portfolio can help investors balance these short-term risks with their longer-term goals.

Speculating

Speculating is the act of buying stocks or other investment products on a “hunch” with the hope of receiving a high rate of return. While these short-term gains can be appealing, investors must remember that speculating involves the highest level of risk. Speculators can achieve big wins, but they can also incur even bigger losses.

A successful wealth-accumulation plan may employ each of these strategies. However, the real victory comes from knowing when to proceed with one strategy over the other.  The professionals with Provenance Wealth Advisors work with individuals and entrepreneurs to implement tax-efficient investment, financial and estate planning strategies that are designed to meet goals and manage risk tolerance in specific time horizons.

About the Author: Robert Mark Weiss, CFA, is a regional director and financial planner with Provenance Wealth Advisors, an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors + CPAs, and a registered representative with PWA Securities, LLC.  For more information, call (941) 308-1126 or email info@provweath.com.

Provenance Wealth Advisors (PWA), 200 E. Las Olas Blvd., Nineteenth Floor Ft. Lauderdale, FL 33301 (954) 712-8888.

Robert Mark Weiss is a registered representative of and offers securities through PWA Securities, LLC, Member FINRA/SIPC.

 This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

 Any opinions are those of the advisors of PWA and not necessarily those of PWA Securities, LLC. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of PWAS, we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Prior to making any investment decision, please consult with your financial advisor about your individual situation.

To learn more about getting started with Provenance Wealth Advisors services click here or contact us at info@provwealth.com

Updated on July 19, 2024