Savings Vs Investments
Savings is accumulating your money, while investing is making that money work to earn more money. Savings and term deposits earn a fixed amount of interest, but investments like equity mutual funds or stocks have the potential to grow.
In simple words, saving is storing money safely, such as in a bank or money market account, for short-term needs such as upcoming expenses or emergencies. Typically, you earn a low, fixed rate of return and can withdraw your money easily.
Savings are also usually more liquid. That is, you may quickly and easily convert your investment to cash.
Investing is taking a risk with a portion of your savings such as by buying stocks or bonds, in hopes of realizing higher long-term returns.
Unlike bank savings, stocks and bonds over the long term have returned enough to outpace inflation, but they also decline in value from time to time.
The rate of returns and risk for savings are often lower than for other forms of investment.
Return is the income from an investment. Risk is the uncertainty that you will receive an expected