What's The Difference Between Saving And Investing?

Saving is a stage on the way to investing.

You cannot be an investor without being a saver - but you can be a saver without being an investor.

When someone talks about savings and saving money, they could be referring to a piggy bank or an online saver deposit account. Savings are effectively cash or cash instruments, such as deposit accounts.

Investing on the other hand usually involves putting your money in more riskier assets such as stocks & shares, property, bonds as well as cash.

As a saver, you will be taking very few and very small risks with your money.

As an investor you are potentially taking a much greater risk. Not only is the return on offer to you likely not to be fixed or guaranteed, the capital sum you invest is at risk as well.

So why would anyone want to take such risks? The short answer, of course, is because the potential rewards may be greater and you want to generate more from your money than is possible by simply leaving it in a bank or building society deposit account.

Why Save?

Often, people save for a specific reason, it's usually the only real way to build up a pot of money.

Saving in cash based accounts is less risky than investing, but it offers limited growth. Saving in cash based accounts is perfect for people who don’t want to take any risks with their money, and most savings accounts have easy access or are for a fixed term.

There are many different ways to save, but whichever way you choose, the general idea is the same: to build up some money - savings - that can be used, for example, to make a large purchase such as a new car, pay school fees or to go on holiday.

Saving in cash based accounts also provide security by making sure that some money is put aside for emergencies or unexpected costs.

Where Can I Put My Money?

There are a number of different types of saving and investment products out there. The links in this section will provide a guide to what is available to you.

What Should I Do Now?

Since there are so many different types of savings and investments, and there are potential risks with investments in particular, it is wise to seek expert advice, tailored to suit your own circumstances.

!

THE VALUE OF INVESTMENTS AND THE INCOME THEY PRODUCE CAN FALL AS WELL AS RISE. YOU MAY GET BACK LESS THAN YOU INVESTED.

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