Savings and investment are easily confused; savings is not equal to investment. Savings is just you putting your money in a safe place (bank) to use it in future or to deal with unexpected expenses. Investment is you making your money “earn” more money for you (stocks, shares, bonds and ETFs) or to grow your wealth. Savings is simple “addition” of money in your account and investment is like “multiplication” of money to your wealth.
Simply saving your money in a bank will impact your purchasing power in the future, but investing money will help secure your purchasing power and thereby your standard of living in the long run. Savings will help you with short term goals like buying jewels, car and with kids’ education fees. Investment takes care of long term goals like retirement, travel and also takes care of inflation.
In simple terms, if you would need money in the near future then you save it. And if there is no need for the money for a longer time period then invest it. Savings and investing are both crucial to ensure you reach your financial goals in the short, medium and long term.