5 Important Differences Between Savings & Investing.

"Savers are losers," says Robert Kiyosaki, and he is right.

Many people think that Saving and Investing are same, but in reality, they are quite different...

The following are the 5 important differences between Saving & Investing;

Short vs Long

Savings is for emergency and short-term needs, whereas investing is ideal for medium and long-term financial goals.

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Idle vs Active

When you save money in a bank, it lies idle, earning interest much less than the prevailing inflation.

Whereas when you invest your money works hard for you and makes more money.

Positive vs Negative Compounding

Investing helps you benefit from positive compounding, whereas saving for long-term goals is affected by negative compounding due to inflation.

Read: Inflation Calculator - Know the impact of inflation on your savings.

Capital vs Wealth

Savings helps you accumulate capital. Investing helps you beat inflation and adds more money to your capital, thus helping you grow wealth.

Liquidity vs Income

Savings provide liquidity, but Investing can provide a regular income.

Particularly during retirement and periods of low or no income, Savings create a feeling of scarcity, as to what will happen when the savings exhaust. Whereas investing creates a feeling of abundance, due to the income from investing.

Read: How to invest for passive income?

Easy access to money saved creates an urge to spend, whereas money invested for long-term goals grows and multiplies.

Read: "A penny saved is a penny spent elsewhere".

Summary

It is enough to have savings equal to emergency needs and short-term needs. And it is very important to invest to achieve medium to long-term goals, grow wealth and leave a lasting legacy.

Expert Advice

As a Qualified and Independent Financial Advisor, I can help you invest for our medium to long-term financial goals.

Arrange a Free Consultation to help you identify your financial goals and set up an action plan for achieving them.

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