When it comes to managing money, people face one of the most common dilemmas between two options, whether to save or invest. Both of them are essential for financial stability with different purposes and benefits. One main difference is risk: saving basically has less risk than investing. But risk comes with the potential of higher returns. 


What is Saving?


Saving basically refers to either setting aside money in a safe and easily accessible place or in your bank account. We usually save for short-term and long-term goals, such as shopping, emergencies and vacations. It’s a safe option to keep your money with less risk, but your money cannot keep up with inflation. 


Key takeaways:
✔ Easy access to money
✔ Low risk
✖ Low returns (interest rates outpace inflation)
✖ Money loses value over time due to inflation


What is Investing?


Investing is a way to put your money into assets like stocks, bonds, real estate, or mutual funds with the expectation of earning a potential return over time.For example, you invest to reach your long-term financial goals, such as saving for college or retirement. But unlike saving, investing carries risk but offers higher rewards. One important thing to remember is that investing comes with no guarantees, and there is always the risk of losing money. For example, if a company you bought stock in were to go bankrupt, your investment could be almost worthless. That's why it's important to diversify your portfolio by investing in different companies and industries to reduce the risk.


Key Takeaways:
✔ High potential returns
✔ Can help achieve long-term goals
✖ High risk of loss
✖ Requires time and knowledge

When to save & When to invest?: The balance approach

By understanding the differences between the two options, you can make better financial decisions that secure your present and future. The smartest financial strategy is to build savings first and then invest for growth. Start by saving enough for short-term needs. Once you have financial stability, invest extra money to grow your wealth over time. Some say it's never too early to start thinking about saving even if you are young and have limited income and investing. As you start early, you can get a significant advantage in growing wealth. Being a young person, you have time on your side so that you can go riskier investments. Even if you suffer losses in them, you have more flexibility to recover and benefit from the positive effects of long-term investing.

Don't just save, grow your money! Investing is the key to financial success...