Saving vs. investing

Compare some differences between saving and investing.

Saving

• Ready cash

  Gives you ready cash; provides funds for emergencies; often used for specific purchases in the near future (usually three years or less)

• Minimal risk

  Minimal or no risk (if money is in a savings account)

• Earn interest

  You earn interest, but savings accounts generally earn a lower return than do investments

Investing

• Achieve major goals

  Can help you achieve long-term, major financial goals

• Always involves risk

  You may lose some or all of the money you invest

• Potential for profit

  Investments have the potential for higher return than a regular savings account. Your investments may appreciate (go up in value) over time. This increases your net worth, which is the value of your assets (what you own) minus your liabilities (what you owe). If you sell for a higher price than you invested initially, you make a profit.