Savings vs Investments

Overview

This lesson clarifies the distinct roles that saving and investing play in financial planning. Saving involves setting aside money in low-risk, easily accessible accounts to cover short-term needs and emergencies, offering stability but modest returns. Investing, on the other hand, focuses on growing wealth over the long term by putting money into assets like stocks or bonds, which carry higher risk but also the potential for greater returns. Understanding when to save and when to invest helps individuals align their financial strategies with their goals, risk tolerance, and time horizons.

Learning Outcomes

• Differentiate between saving and investing in terms of purpose, risk, and return potential.

• Identify appropriate financial goals for saving versus investing.

• Explain the importance of liquidity and risk tolerance in choosing between savings and investment options.

• Assess how time horizon influences the decision to save or invest.