Saving and investing are two terms, which have been used interchangeably in the financial sector. However, fewer people know how these are different, and can help you attain your financial goals. Here’s a detailed rundown on the differences between saving and investing.
Saving is the process of setting aside a small amount of money and parking it in extremely safe and liquid avenues. Setting aside savings on a regular basis, can help you build a decent sum that can be helpful in case of emergencies. You can also fix a timeline, achieve your savings goal, and utilise the same towards buying a car or taking a vacation. In such cases, using your investment is a better option.
In the present times, there is a greater need to ensure higher safety of savings, so there is no risk involved. Individuals look to secure their savings in fixed-income instruments like fixed deposit, provident fund, or government savings schemes that offer assured returns. Savings account is also a mode which offers interest rates from 3-5% p.a.
Investing involves deploying funds in high-growth instruments like stocks, bonds, and real estate, so these funds have the potential to grow faster. Usually, there’s an inherent risk associated with any investment, based on which investment instruments can be classified under low-risk and high-risk instruments. Usually, low-risk instruments work best for short-term goals, whereas high-risk instruments are good for long-term gains, as you’re invested for a longer period.
Let’s look at the key differences between saving and investing below:
|Lower returns||Higher returns|
|Money grows at a slow, steady paces||The potential for higher and faster growth of money is high|
|Returns on your savings are usually assured||Most investment tools come with risks, and returns are affected by market forces|
|Money held in savings account/short-term deposits||Money in stocks, shares, bonds and real estate|
For risk-averse individuals looking for steady growth of savings, investing money in an FD is a great option. As one of the safest instruments, a fixed deposit is a great choice for those who want steady growth of savings. Look for banks and NBFCs offering the highest interest rate and park a part of your savings in a FD scheme. Bajaj Finance FD offers attractive interest rates of up to 6.75%* p.a., which are higher than that offered on saving accounts.
It’s never too early or never too late to start with risk-free investment options. Start today and allow your money to grow.