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What’s the Difference between Saving and Investing?

It’s about how your money grows.

Saving is putting money aside with the intention to spend it later. There isn’t much fluctuation in the amount, except maybe bank charges or a small increase with inflation. And it’s mainly you that determines how much is in there. If you add money, it gets bigger by that amount. If you withdraw money, it shrinks by that amount. 

Investing is putting money aside so that it creates more money for you with investment returns or profit. It’s still you depositing money into an account, but what happens to the money is different. You can choose your levels of risk (we’ll get into that), your time frame (we’ll get into that too), and the kind of thing you invest in (you guessed it, we’re getting to that). The main thing is that external influences will affect the amount in your account. Property prices, stock market crashes, and exchange rates are just a few reasons your investment could look really bad or really good, depending on the day. 

So remember: when you invest, you play the long game. You're not meant to withdraw that money any time soon. (Of course, we're only covering the basics here. For a more detailed analysis of your personal financial situation, a financial advisor or investment specialist can help.)

Next up we'll look at how your financial goals should guide your investment choices.

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