A shared characteristic of saving and investing is the importance that they both play in our lives. If you are not doing either, the time to get started is now. This may require changes in spending, tracking, and in the use of your income.
Saving should be short-term while investing should be long-term. The biggest and most influential difference between saving and investing is risk. You save when you put money, it has little risk of loss of funds but also has minimal gains.
When you save, you are usually able to pull that money out when you need it. When you invest, you have the potential for better long-term gains or rewards, but also the potential for loss. You risk more when investing for a large return, but your potential loss can be huge as well.
It is important to review your goals to figure out which option is best for you, saving or investing. Choosing incorrectly could cost you a lot of money in fees or loss of potential income earned through investing.
When investing, we want our investments to make us money, while the goal of saving is to keep our money safe, making very little return.It is possible to be a wonderful investor, have growth in your 401(k), and have investment properties, but be unable to make ends meet because you do not understand how to save your short term funds.
You can save money each month, but long term, those savings will not pay in retirement and most likely will not pay for your children's college, making investing equally important. This should remind us how important both are, especially when done together.
Time is the greatest opportunity to grow your money and to meet your goals. With a relatively small amount of money, you can start investing and saving and get on the path to reaching all of your financial goals.
Saving and investing are both important concepts for building a sound financial foundation, but they’re not the same thing. While both can help you achieve a more comfortable financial future, you need to know the differences and when it’s best to save compared to when it’s best to invest.