Saving vs Investing: Why Investing is better than Saving?

Published on August 31, 2020

Saving vs Investing: Why Investing is better than Saving?

Over the years, the two words saving and investing have been used interchangeably. Needless to say that they are both different sides of the same coin called Money, and important aspects of personal finance management. So, it is vital for you to understand what is the difference between saving and investing.

Saving 

It is referred to as a part of total income which is left at hand after paying off monthly bills and other expenses. The essential meaning of saving money refers to the process of keeping aside a certain amount of money which can be used at the time of emergency. 

Investing

It is the process of investing money in financial instruments which helps a person to build wealth. The idea of investing is to save money and earn profits on it.It is the process of investing money in financial instruments which helps a person to build wealth. The idea of investing is to save money and earn profits on it.

The key differences between Saving and Investing

SavingInvesting
Saving is normally done for short-term goals, for example, buying a vehicle, planning a holiday or for a rainy day.Investing is meant for long-term goals at least 4-5 years, for example, saving for a home, child’s education, and retirement.
Easy to access funds: With the help of a Savings account a person can get easy cash whenever he/she needs..¬†Difficult to access cash: When you put in investments, it’s normally not as simple to get money in your hands quickly as compared to savings. Cashing out too early from a long term investment could lead to losses due to market movements.
Low Returns: With a saving account, a person can earn interest by holding cash in a bank account. However, it offers a negligible return as compared to investment.High Returns: Investment offers higher return than a standard saving account. With time, the investment helps to build wealth.

The stepping stone of wealth creation is savings, which is based on the individual’s income. The higher the salary of a person, the better is his ability to save as the increase in pay builds the tendency to save. 

Abhishek Datta, one of the leading financial advisors in Dubai, helps you effectively plan your investment portfolio so your goals are easily met with. Start today.

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