Do You Know the Difference Between Saving and Investing?

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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Your explanation is very interesting. When I was working for a rural development research survey, I met a lady from a rural community. I can remember how she explanation me the money spent in her children’s’ education as an investment.

It's rather informative post! Thank you

Well I had a confutation of what is this all about, also the big different between saving and investing, so thanks for your detail information about the subject. Thanks for sharing such important information.

Planned investments lead good Savings:cool:

Like this statement

very good explanation

i like it

Quote:

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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.

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This is what the gold sales people tell you. But it patently is not true! Holding gold is as speculative as any other, the prices go up and down all the time.

good

now i know the difference. thanks for explanation

good job....u have explained very well.............

Saving involves the protection and preservation of money from loss.

Investing means to make a long-term commitment of putting money away and letting it grow.

Saving money or other assets for a long period, usually a bank, without risk of loss or gain. Investing money or other property acquired with the hope that it will generate revenue, reduce costs, or appreciate in the future.

Here is very simple explanation for the different between saving and investing:
saving usually without risk to lose, but without chances to earn money,
investing always with risk to lose and with chances to earn more (money can work for you)

many people don't understand the different between lottery and smart investing with controlled risk and strategy!
investing is not a lottery and game.

Nice article! I think now everyone will know the difference.