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Saving vs Investing

Everything you needed to know about saving and investing

Saving and investing are equally important to help you attain your financial goals. Despite being used together commonly, there are several differences between both these terms. Let’s examine the differences between these terms, in detail.

What is Saving?

Saving is the residual amount that remains in your hand, after meeting all your expenses. While there is no end to expenditure, it is advisable to earmark a certain percentage of your earning as savings. The habit of compulsory saving will 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.

Savings are ideal to meet your short-term goals. There is almost no risk involved, and you also enjoy liquidity. When you deposit an amount in fixed deposits, you can be assured that the amount is secure, unless the bank goes bankrupt. The only drawback with saving is the fact that the interest rate is very low.

What is Investing?

Deploying funds in assets like stocks, bonds, property etc. to earn returns is investing. While some investors are risk-averse, there others who are risk-takers and are willing to take the extra risk to earn higher returns.

Short-term investments fetch you little returns, long-term investments can garner good returns in your kitty. Investment in land/building (an appreciable asset) will get you good gains in the long run.

Saving Vs Investing: Are Both Necessary?

Yes, both are needed to secure your future financially. First and foremost, you need funds to run your household and meet other expenses. Emergencies demand money. You need to first ensure that you build on your saving reserves, before investing your money. It is ideal to meet long term goals. However, if not done prudently, it can result in loss and erode your savings.

 

Key Differences

SAVING

INVESTING

Meets short term goals
Meets short term goals
Smaller returns
Higher returns
No growth in value
Helps your money grow
Scores on liquidity. There is easy access to cash
Difficult to liquidate investments at short notice, especially if you’ve chosen long-term investments
Safe and secure
Most investment tools come with inherent risks, impacted by market forces
Money is held in savings account /short term deposits
Money is put into stocks, shares, bonds and real estate
No tax on saving
Investment earnings attract tax

If you’re someone who doesn’t like taking risks, you can start investing your money in FD Schemes. Fixed Deposits are amongst the safest investment instruments that offer guaranteed returns. Look for banks and NBFCs offering the highest interest rate and park a part of your savings in a FD scheme. Bajaj Finance FDs offer higher interest rate which is way higher than offered interest rate 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.

Whether it’s the right time to save or invest is guided by your goals, your financial situation, and risk tolerance. The right time to invest in risky investment tools is only after you’ve built sufficient savings, paid off high value debts, and secured your retirement life. Once these aspects are well taken care of, you can invest your money wisely and watch it grow.

Want to invest your money in FD? Check how to open FD account online or directly contact Bajaj Finance Customer Care for any query.

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