What is the difference between savings and investment?

Answer 1

Saving is saving and an investment is an investment.

Savings are money or other assets kept over a long period of time, usually in a bank without any risk of loss or making profit. Investments are money or other assets purchased with the hope that it will generate income, reduce costs, or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price. And usually it has also a risk of some loss

As far as we are talking about investment then it is certain amount of money which is saved or use in some projects where we can take profit more than the money we have saved or invested. In general terms investment means the use of money to make more money.

How Saving and Investing Differ:

Saving -- Objective: Short term needs Vehicles Used: Bank or money market accounts, CD's Risk: None on balances up to $200,000.00 per depositor (FDIC) Return: Low interest. Key Benefit: Money is safe and accessible. Key Drawback: Historically returns have not outpaced inflation. Savings are Idle.

Investing -- Objective: Long-term capital growth Vehicles Used: Stocks, bonds, mutual funds, tools, parts, equipment upgrades. Risk: Varies, depending on the source of securities owned. Return: Interest paid and capital gains earned. Lower cost of production in the future which allows greater net gains in the future. Key Benefit: Returns have outpaced inflation over the long term. Key Drawback: You could lose money if securities decline in value.

Getting back to the difference between a saver and an investor, there is one word that separates them, and that word is leverage. One definition of leverage is the ability to do more with less. Saving can be a good vehicle for gain, but only because it protects investors from themselves and from incompetent or unscrupulous advisors. The mistakes that can be made in choosing investments or by holding onto the wrong investments can cost us dearly. But choosing investments well and using them -- that holds the potential for great gains later.