Role of Personal Savings and Portfolio Investment

What are the roles of personal savings and portfolio investment in National Economic Development?

The contribution of entrepreneurship to the promotion of economic development can not be underestimated. The entrepreneurs are the change agents and the prime movers of the economy.

Entrepreneurs use human and economic resources to help them to implement their ideas. Economic resources include money and equipment.

When you have estimated how much start-up capital you need for your new business, the next questions are; where do you get that capital from?

You will need the full amount at the start because the money is for initial investments and working capital for the first months of operation. It is therefore important that you do not start setting up your business until you have all the start-up capital you need.

In terms of personal finance, saving refers to preserving money for future use-typically by putting it on deposit – this is distinct from investment where there is an element of risk.

Savings can be described as a substantial part of income kept for future use by an individual, households a firm, and the government. In other words, savings is the portion of the income that is set aside for further investment or for future use.

Reasons For Savings

Savings is not a new phenomenon in the economic circle. There are a number of reasons for savings depending on the circumstantial problems/issues surrounding it. Such reasons include:

• Investment purposes
• For family up-keeping
• To acquire assets
• For special needs
• For old age

Methods of Savings

1. Banks

• Current
• Savings
• Deposit

2. Thrift and Cooperatives
3. Financial institutions
4. Buying of shares

Saving differs from savings in that the first refers to the act of putting aside money for future use, whereas the second refers to the money itself one saved.

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