Aug 25 2008
Difference between Savings and Investments
Both savings and investments serve the same purpose. They are meant for securing future gains. Yet there are some inherent technical differences between them. They reach the same goals but with different ways. Here in this article we will discuss these differences.
Savings is keeping aside some of your income that you earned today, in a different pocket for your future to secure it. This gives financial as well as mental security. On the other hand, investment is spending money on purchase of an asset from which recurring profit can be earned. Investment can also be putting money on market or bank.
Another difference lies in the liquidity of the fund. In case of savings in banking sector, all you need is to go to the bank and take out the money when in need of immediate requirement. In worst case, the bank may charge you any amount for the default. But if you have invested in real estate either you will have to settle with anything you can get or have to wait for a miracle to have a customer offering you good price.
Profit is not a major concern in case of savings neither there is any risk of loss. For example, in accounts like regular saving accounts you get 7% interest which is considered profitable. But in case of investment, profit is the main criterion and there is always risk of losing money.
So, it can be said that savings involve idle money while investments involve money with profit motive.
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