Saving and investing can strengthen your finances. Both are ways to accumulate money. However, saving and investing are not the same. What are the differences between saving and investing? Which one should you choose?
Saving vs. Investing: The Differences
1. Types of financial goals to be achieved
Financial goals can generally be divided into 2 categories: short-term and long-term. Saving money more likely aims at achieving short-term financial goals, such as saving for a car, saving for vacations and saving for emergencies.
Investing is more directed towards the realization of long-term financial goals, such as saving for children's education and saving for retirement.
However, it is possible for you to do both to achieve the same financial goal. Building a retirement fund, for example, can be done by saving money in the Jago’s Locked Pocket and investing in mutual funds with Bibit.
2. Access to cash
The next difference lies in access to cash. If you save money in a savings account, such as in the Jago’s Saving Pocket, you can immediately use the money.
It's different with investment. For mutual fund investments, for example, you need to make a disbursement. The disbursement will then be processed and it may take a few days for the cash to arrive in your account.
3. Involved risk
Saving has a lower risk than investing. When you save you get a fixed interest every month. Saving money in either a Saving Pocket or a Locked Pocket, you can enjoy competitive interest rates.
Meanwhile, investment does not guarantee a return. There is always the possibility that you will lose some of the funds that have been invested. However, you can get a greater return on investment than saving money.
Should I Save or Invest?
If you ask whether you should save or invest, the answer depends on your goals, financial condition and risk tolerance. Everyone’s goals, financial condition and risk tolerance may be different.
Suggestion from Jagomin, having savings and money that can be used at any time (especially to deal with emergencies or the unexpected) and in the next few years to meet a need is important. Then, if you have debt, it’s best to use the money to pay it off before you start investing.
Let’s start managing finances according to needs and goals you want to achieve. With Jago, you are one step closer to achieving your dreams.
*Interest rate can change at any time according to bank policy
