Saving vs Investing: Which Is Better?

Many Households Are Feeling The Pinch With Rising Inflation. (Image Source: Shutterstock)

Where to Put Your Money During High Inflation

Many households are feeling the pinch with rising inflation. Over time, inflation increases the cost of goods and services and decreases the number of goods and services you can buy with your dollar. If wages stay the same but inflation increases, it will take an increasingly larger percentage of your income to maintain your current lifestyle.

Money Management: What Is Saving?

Both saving and investing accumulate money and wealth but in two different ways. When saving, you put money aside gradually, typically in a savings account. Often, you’re saving for a particular thing, like a holiday, car, or retirement.

Think About Having an Emergency Backup Fund for Three to Six Months. (Image Source: Shutterstock)

What Is Investment?

One of the most significant differences between investing and saving is a risk. With savings, there is little risk of losing your funds. With investing, the risk is higher, but you have more potential for long-term gains. Investing involves using your money and making it grow through buying assets that will increase in value (i.e., stocks, shares, property).

Warren Buffett: How To Invest For Beginners︱Cooper Academy
  • Real estate investment trusts (REITs) — allow private investors to profit from real estate without buying a property outright
  • The S&P 500 — stock market index that tracks the largest 500 public companies with stocks in all major sectors, including technology
  • Bloomberg Aggregate Bond Index — a fixed-income index that measures the performance of the overall US bond market
  • Treasury inflation-protected securities (TIPS) — a US treasury bond indexed to inflation

How to Build Wealth: Saving vs Investing

To achieve long-term financial goals like retiring early, investing is crucial. If you have an emergency fund and don’t have high-interest debt, then investing the extra money you have can help you build wealth over time.

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