The Difference:
To put it simply, saving is the act of setting funds aside to meet financial goals. You could be saving money for a new laptop, or starting an emergency fund 💵 As you build your savings, the money is closer to being readily available whenever you need it. There is also no risk of the money losing its value.
Investing, however, is the act of putting money into something to generate profit. There are many different ways to invest. You can invest in a venture , like starting your own business 💼, in assets like real estate 🏠, or in stocks 📈 These investments offer you returns, and you can also sell them later at a higher price. Investments are targeted towards more long term financial goals: some parents, for example, invest to be able to afford higher education for their children.
The main and perhaps most important difference between saving and investing is the risk factor. We mentioned that when you save, the value of the money you’re collecting stays the same. With investing, that’s not always the case. People who choose to invest assume that their money will grow over time. Sometimes, though, you risk losing money 😬