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Difference Between

Saving and Investment

Prof. Dennison Hastings | Leonton University

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What’s inside

Why

invest

Explore the benefits

of investing

Saving vs. Investing

Learn the difference between saving and investing

Balancing Savings and Investment

Discover some tips on how to balance saving and investing

Tips on

investing

Get started with practical tips on investing

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Imagine this: You just found $100 on the ground.

What would you do with it? Would you stash it in your

wallet, spend it immediately, or try turning it into $200?

Are you a saver or a spender?

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Savings

Setting aside money, typically in a bank account, for

future use

Investing

Involves buying assets that have the potential for higher returns

Saving vs. Investing

The difference between saving and investing

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Saving vs. Investing

Savings

Investing

Type of goal

Often for short-term goals, such as saving for a large purchase or emergencies

May help reach long-term goals, such as planning for retirement or paying a child’s education

Time it takes to

access funds

Easily accessible

Often takes a longer time to access

Risk involved

Involves minimal risk and funds are often strictly regulated

Does not always guarantee a return and losing the invested funds is possible

Earning potential

Generally low

Has higher potential return compared to a savings account

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How much should you save vs. invest?

A good starting point is saving 20% of your income.

After building your emergency fund, begin allocating any extra funds toward investments.

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emergency fund

Saving

Financial goals for

saving vs. investing

Investing

vacation or travel

new gadgets

car down-payment

property taxes

wealth growth

child’s education

business

home ownership

retirement

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Why should you invest?

    • Investing helps you stay ahead of rising living costs caused by inflation
    • Long-term investments also offer the potential for compound interest and significant wealth growth

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Risk

Return

Profit or gain earned from an investment

The possibility of an investment losing value

The risk-return tradeoff

Investments differ in their potential returns and market risk levels

Risk

Return

Low risk

Low return

High risk

Higher potential return

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Tips when starting to invest

Start by building an emergency fund

Setting aside 3-6 months’ worth of living expenses is recommended.

Diversify your investment portfolio

Owning a mix of investments can protect your money in case of market downturns.

Explore how to allocate your assets wisely

Balance risk and security by deciding how much to allocate to stocks, bonds, and other investments based

on your financial goals and risk tolerance.

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Savings vs. Investing

Savings involve setting aside money for short-term goals, while investing focuses on buying assets with the potential for higher returns.

Balancing saving and investing

A good starting point is to save 20% of your income and build an emergency fund before investing your extra funds.

Tips when investing

When investing, consider your risk tolerance and ensure you diversify your portfolio to manage risk effectively.

Review

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Investing can be intimidating for beginners. Think of a fun and simple analogy to explain investment terms and concepts, and present it creatively on a poster.

Explain investing using analogies

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