What is the difference between Savings and Investments

We all have some dreams like having a Own House, Gold, Car, Bank Balances, Children Education, Health, Marriage, Well settled life , Business and more assets.Is it right ? . Yes i think I am correct for everyone these will be their dreams.To achieve or fulfill them we want to start saving or investing a part from our income . Here's the question arises which is better either Savings or Investing . So my dear friends before we choose a option we have to know differences what is Savings and Investments,so that we can think about our need expenditures returns and now there is a scope of taking a wise decision. you can either save it or invest it. Many people wrongly assume that both the concepts are same. However, there are some major differences between the two. Let us understand these two concepts in detail.

What is Savings:

Savings are defined as the part of consumers disposable income .which is not used for current consumption. Rather kept a side for future use.it is made to meet unexpected future use. It is made to meet the unexpected situations or emergency requirements. It makes a person financially strong and secure. There are several ways through which a person can save money like, accumulating it in the form of cash holdings, or depositing it into the savings account, pension account or in any investment fund.

What is Investment:

The process of investing something It could be anything, i.e. money, time, efforts or other resources to earn returns in future. When you purchase an asset with the hope that it will grow and give good returns in the coming years, it is an investment.The ultimate purpose that works behind the investment is the creation of wealth which can be in the form of appreciation in capital, interest earnings, dividend income, rental income. Investment can be made in different investment sectors like stocks, bonds, mutual funds, commodities, currency, or any other securities or assets.With an investment, there is always a risk of losing money. Undoubtedly, the investment provides higher returns than savings, as there is a nominal rate of interest on savings. However, the investments can earn money more than the invested amount, if invested wisely.

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Time

Savings are usually used to meet your short term needs. People save in order to deal with emergency situations and meet unexpected expenses. However, investment generally entails a longer horizon of six months or more. It is designed to provide returns and grow your money over a period of time.

Risk and reward

Another difference between savings and investment is the risk they bear and returns they offer. While savings stored in a safety vault are very safe, they will not generate any returns over the years. Even if money is kept in a savings account, it will provide a negligible rate of return. On the other hand, money invested in various products like stocks, mutual funds, gold, etc. is subject to more risks, but has the potential to grow over time. If invested wisely, your money can grow manifold over years.👍👍

What is the difference between Savings and Investments