Investment vs. Saving


Investment vs. Saving

/sav·ing/ v 

The money one has saved, esp. through a bank or official scheme.

/in·vest·ment/ n

The action or process of investing money for profit or material result.

We are all familiar with the idea of saving money to fulfill basic needs or prepare for an emergency. People used to keep money in piggy banks, under their pillow, or inside a cupboard until they could put their money in the bank. Did you realize though that the interest banks offer is not in line with annual inflation? This means that if we compare our savings with the rising costs of food and services, our savings will depreciate in value.

Meanwhile, investment can be defined as an act, be it material, effort or time, which is taken today to gain profit tomorrow. In terms of material investment, the value we invest will grow to exceed its initial value if we manage it properly. Therefore, investment has the potential to offer more benefits than conventional savings.

That is what makes investment different from savings. Although conventional savings are still needed for emergencies, it will not grow in proportion with inflation, as well as rising costs of food and services.

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