"For A Secured & Wealthier Tomorrow..."

Difference : Should I Save Or Invest My Money?

What is difference between savings and investment

Save And Invest

Every month, most of us earn an income. Be it in the form of a salary or business income. After excluding all the necessary as well as unplanned expenses, what ever is left behind is called the money which we have remained in our hand. Now, here comes the most important part of personal finance: Should I save or invest this remaining sum of money left in my hand? 


A very well known Investor Mr. Warren Buffet has nicely given the advice for 'Saving' as:



"Don't save what is left after spending; spend what is left after saving."

And, after following this step comes the most important factor called 'Investing'.

Here, I have tried to clear in very easy language the most important difference in the field of personal finance.

The basic differences between savings and investment are explained in the following points:
  • Savings means to set aside a part of your income for future use. Investment is defined as the act of putting funds into productive uses, i.e. investing in such investment vehicles which can reap money over time.
  • People save money, to fulfill their unexpected expenses or urgent money requirements. Conversely, investments are made to generate returns over the period that can help in capital formation.
  • With an investment, there is always a risk of losing money. Unlike savings, where there is no or comparatively fewer chances of losing the hard-earned money.
  • Undoubtedly, the investment provides higher returns than savings, as there is a nominal rate of interest on savings. However, the investments can earn money more than the invested amount, if invested wisely.
  • You can have access to your savings, anytime because they are highly liquid, but in the case of investment you cannot have easy access to money because the process of selling the investments takes some time.
Conclusion:

Savings, alone is not enough to the increase your wealth, because it can only accumulate funds. There must be investment of your savings into productive investment tools. There are number of limitless options to invest your earnings. Although risk and returns are always associated with it, but when there is no risk, there is no profit.

As the excess of everything is bad, so as in the case of saving and investment, i.e. it is important for an economy that the savings and investment should be done in the correct proportion. The excess of savings over investment will lead to unemployment, and if it is revered, then inflation may occur.

So now what are you going to opt? Savings or Investment?

Happy Investing!



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