Saving Vs. Investing? Which One is Better?

Saving vs. investing is one of the questions that often comes to mind, especially for young people looking for the best choices for the future. Both look the same but, of course, have pluses and minuses.

Saving Vs. Investing, What’s The Difference?

You certainly will know which option is better after you see the difference between the two. Although both are important, there needs to be one priority that you must prioritize.

Saving usually results in lower returns but is almost risk-free. While investment gets a higher return, even though the risk of loss is significant. Here is a further understanding of saving vs. investing:

1. Significant Difference between Saving and Investing

Investments are made for targets and long-term, for example, for 10-20 years. Invasting is also usually used for long-term needs, such as paying children’s college fees or preparing for retirement.

Whereas saving is usually done only to save money in preparation for emergencies if you need fast cash at any time. In addition, saving is done if someone has specific targets and goals.

2. Types of Savings

Several types of savings can answer your question: Which is better between saving and investing? There are types of saving that will make you understand more.

a) Conventional Savings

This type of savings is the most widely owned by the community because it makes it easier for them to save money. With this savings, you will get a savings book and ATM card so they can save freely anytime, and 0.5 – 2% every month.

b) Term Savings

Term savings are bound by a specific period. The bank and the customer have agreed upon this period.

c) Current Account Savings

These savings have a business purpose, so many entrepreneurs own them. They use these savings for transactions that require demand deposits and checks.

d) Hajj Savings

The funds you allocate will be used for the pilgrimage. That means the funds saved must follow the appropriate nominal for your expedition.

e) Business Savings

This service is provided for those who want to open a savings account for business purposes. Generally, there is a minimum deposit requirement, which is more significant than ordinary savings.

f) Student Savings

This type of savings is intended for students who want to save. The minimum deposit amount is minimal, and there are no monthly administration fees.

g) Digital Savings

Similar to conventional savings but more practical, you no longer need to bother queuing at a bank or ATM to save or withdraw money.

3. Types of Investing

Now let’s discuss the types of investing that will make you understand better the saving vs. investing:

a) Mutual Funds

This investment is suitable for beginners and has a small risk with low initial capital. You also don’t need to monitor investment progress all the time because the investment manager manages everything.

b) Shares

This investment may already be familiar. This investment means an activity of buying and selling shares that have the potential to provide many times more profits than other investment instruments.

c) Gold

Safe and profitable long-term investment because the price of gold and precious metals tends to increase every year

d) Time Deposits

A time deposit is the same as conventional savings. However, funds can only be disbursed after entering a maturity of at least 3-12 months.

d) Property

Investments in the form of land or buildings and the capital disbursed are substantial. But the benefits are promising, considering that property values continue to increase every year

4. Which is the Best and Deserves to be Prioritized?

The choice between saving and investing depends on your current financial position. If you need money in the short term, you can choose to use savings.

If you don’t need money for a purpose for the next five years, you should invest the funds you have. In addition, you need to remember that you shouldn’t invest emergency funds, but it’s better to keep them in a savings account.

Conclusion

Saving vs. investing is no longer a headache. Now you know the fundamental differences between the two, know the types and know which one you should prioritize for the future.