The majority of people think saving and investing are synonyms, but this is absolutely incorrect.

There is a big difference between both, and it resides in the fact that investing is what you do to grow your wealth, and saving is what you do to preserve it.

It can get much clearer if we take a practical example. Let’s say that you divide your assets into these categories:

- Private property, which includes your home, art pieces, and other valuables.

Your private property may have a lot of financial value, but you are using it and will continue to use it in the future; thus, it can’t be an investment.

- Active investments, which include any businesses you own or control.

Your active investments are great, providing you keep them active.

- Passive investments, which include stocks, bonds, and others.

Your passive investments are what you normally think about when you talk about investing, but these are risky, and you don’t want to risk your savings; thus, these are not savings.

- Savings, which include any stored, safe wealth.

Your savings are the money you put aside every year after you have bought the properties you want and made the investments that enticed you. Savings are the part you want to retain.

You can put your savings in several media such as cash, bonds, rental real estate, or gold; however, the best option is gold. Gold retains its value against inflation, war, or a weakening currency.

On the other hand, cash gives close to zero return, bonds are very risky, and rental real estate… well, you know what’s been going on. Rental real estate today must be approached very cautiously, if at all.

So, if you haven’t yet, consider thoroughly which of your activities are investments and where you are putting your savings; this small clarification of terms can really mean the difference between retiring safely and just getting by for the rest of your life.

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