Saving vs Investing – MMV298

January 15, 2016 1 Comment

Saving vs Investing? Is there a difference? Does it even matter, or is it  just semantics? Well I reckon there is a difference:

These are the five main differences which came to mind:

Saving vs Investing

1. Investing is for the long term, say five years or more. Saving is for shorter-term money, from 1-5 years or thereabouts.
2. Investing involves real assets like stocks & shares, property etc. Saving involves keeping money in cash, on deposit.
3. Because of this, investing involves risk, whereas saving, for the most part, means your money is guaranteed to be safe.
4. Investing comes at a cost, with dealing fees, management fees etc, whereas there are often no explicit costs for saving.
5. Investing should be done with careful research or professional advice. Saving is just about finding the best interest rate.

So you see – clear differences. Are you saving or investing?

Which you do depends on  your timescales, your tolerance and capacity for risk, your plans for the money and many other factors. But the biggest determinant in the saving vs investing dilemma is timescale.

It is fairly simple: If you need access to the money within four to five years, you should not invest it in things which can go down in value. Instead, keep the money safe in a deposit account and get the best interest rate you can.