saving versus investing
3 minutesSaving money can be easy to understand, but it’s not the only option you have when it comes to your money. If you’ve got a good handle on your savings and debt, now might be a good time to look at investing your money. So, what’s the difference between saving and investing? Let's take a look.
what is…
…saving
money saved over time for short-term personal goals, like building up an emergency fund, or making a down payment on a house or a car
…investing
using money to buy a financial product or asset, with the intention of letting it grow in value over time, for long-term goals like retirement.
what are some examples of…
…saving
- traditional savings account
- money market accounts
…investing
- stocks and bonds
- 401k plans, IRAs and mutual funds
- real estate
what are some pros of…
…saving
- inexpensive, quick and easy to start
- minimal risk
- you can usually access the money if you need it
…investing
- potential higher returns compared to saving
- money could grow more quickly
- some investments may offer tax benefits
what are some cons of…
…saving
- returns on money are low
- money may decrease in value over time due to inflation
…investing
- can be expensive to start
- investments can decrease in value
- can be risky – returns aren’t guaranteed, and funds aren’t FDIC-insured
Remember: there’s no one-size-fits-all approach to your finances, but it’s important to look at your options and do what’s best for you and your family’s financial future.