Saving Vs. Investing: Recognize the Difference

I can get into the technical definitions of saving vs. investing.  But honestly that’s not the point of this little piece.

If you want to know what these differences are I suggest you look them up.

I want to get more into what I feel are the philosophical and timely differences of the two.

When I think of saving I think of “putting away so I can’t lose.”

In other words when I’m saving money I’m putting it into a place where sure, I can make money over time but I know there’s zero to little risk of me losing it.

Another key component of saving, in my mind is the availability factor.  When I think of savings I think of money that’s either liquid or readily available.  That’s key.

Investing on the other hand is longer term and carries more risk.

Put it this way, you can save money to invest but you are less likely going to invest money to save.

When you invest in something you are putting in time, money, effort into a future that’s not guaranteed but one you are betting will return favorably.

Money invested into a fund, real estate, bond, stock, etc etc carries slightly more risk but your future payout should be higher than just saving.

But it doesn’t just have to be money.

You can invest time into a skill that won’t have any immediate benefit but one that could have a longer-term payout.

The important thing is to understand and know the differences between saving and investing and when to use each.

I personally believe you should always be doing both for not only growth but also safety.

For example, always set aside savings for a rainy day, but always have money in investments for a potential payoff down the road.

Hope this helps.

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