The Difference Between Saving and Investing
The terms "Saving" and "Investing" often are used interchangeably, but there is a difference between both.
- Saving is setting aside money you don’t spend now for emergencies or for future use. It’s the money you want to be able to access quickly, with little or no risk, and with the least amount of taxes. Financial institutions (banks) offer a number of different savings options such as savings account.
- Investing is buying assets such as stocks, bonds, mutual funds or real estate with the expectation that your investment will make money for you. Investments usually are selected to achieve long-term goals. Generally speaking, investments can be further categorized as income investments or growth investments.
Making a choice between either saving or investing will depend on your goal for the money and your risk tolerance.