What Distinguishes Investing From Savings?
- Nov 08, 2023
What are Savings?
Savings is the process of setting money aside in bank accounts for a future need or expense. The money you've saved is very low-risk and highly liquid, and it's available for purchases and emergencies pretty quickly.
What is Investing?
The process of investing involves using your money to purchase assets that increase in value over time and offer high returns in exchange for a greater degree of risk. Generally speaking, investments are illiquid and volatile. Realizing your capital gains, or selling your assets for a profit, is how you get returns.
What is the Difference Between Savings and Investment?
Savings and investing are not the same thing. Savings are typically placed into fixed deposit accounts or bank savings accounts. Contrarily, investing entails purchasing items that have the potential to appreciate in value over time, such as stocks, gold, real estate, and mutual fund shares.
