Save and Invest

There has always been a dilemma in my mind regarding savings or investments. I came across a nice post regarding the never ending conflict between savings and investments. Many financial researchers suggest that the cash in hand should be put to optimal use by a using financial instruments that give a perfect blend between savings and investments.

Some consider saving as a protection or insurance from the volatilities of investment in the markets, some stretch this concept further and consider hedge funds as savings that can protect them from the market turbulence. One of the oldest forms of such savings was gold. This has even been given a religious flavor as some religions encourage buying gold on special days and festivals. In India this is coupled with Government Bonds, Government Savings Schemes and Fixed Deposits.



Importance of a perfect blend of Savings and Investment:

In his speech on Mar 24, Barack Obama said, "At the end of the day, the best way to bring our deficit down in the long run is not with a budget that continues the very same policies that have led to a narrow prosperity and massive debt. .... It's with a budget that leads to broad economic growth by moving from an era of borrow and spend to one where we save and to one where we save and invest".

The need for the perfect blend of savings and investments that results in the optimum growth is the primary motivation that has led to the evolution of many financial instruments and mathematical models to optimize these instruments. Financial researchers and KPOs have been known to toil hard to study these models to ensure that the desire for this perfect blend of investments and savings is attained.