Generally speaking, an investment is something you put time or money into and get a return from. For example, we talk about investing in a personal relationship. We also talk about investing in the stock market. For this section, we will use the financial definition of investing: a financial asset you contribute money to and from which you receive an interest payment, a dividend, or an increase in the market value over time (or all three). You use money from your savings to invest:
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With your Disposable Income, you can either spend it or save it:
Unless you hide your cash in the ground, you will take your savings and invest it somewhere you will get a return.
Keeping these equations in mind, it is hopefully apparent that the more
disposable income you save, the more you are able to invest. But where to invest?