Saving vs. Investing: Understanding the Key Differences

The words “saving”and “investing”are sometimes used interchangeably,but when it comes right down to it,we should be engaged in both to secure our financial future.

A shared characteristic of both saving and investing is the utmost importance that they play in our lives.If you are not doing either, the time to get started is now.This may require changes in spending, tracking,and in the utilization of your income,but it can and should be built into your plan.A general rule of thumb is saving should be short-term while investing shuld be long-term.Keeping that in mind,let’s review the differences.

We save for purchases and emergencies. Saving money typically means it is available when we need it and it has a low risk of losing value. It is important to track your savings, putting a deadline, or timeline, and value to your goals. For example, if you are saving for your annual family vacation, you might want to target $3,000 to save in nine months to withdraw at the end of the year. You then know how much you need, how much to save monthly, and the ability to take the money out without fees to spend on that treasured vacation.