The Key Difference Between Saving and Investing

saving vs investing
Feature	Saving	Investing
Definition	Setting aside money for future use, usually in low-risk accounts.	Using money to buy assets aiming for growth or income over time.
Risk Level	Low risk, money is usually safe and easily accessible.	Higher risk, with potential for loss but also higher returns.
Return	Typically earns interest, usually lower returns.	Potential for capital gains, dividends, or interest, generally higher returns.
Time Horizon	Short to medium term; money kept for emergencies or goals.	Medium to long term; money committed for growth or income.
Liquidity	Highly liquid; can withdraw funds quickly.	Less liquid; assets may take time to sell and convert to cash.
Purpose	To preserve capital and keep funds safe.	To grow wealth or generate income over time.
Examples	Bank savings accounts, fixed deposits, money market accounts.	Stocks, bonds, mutual funds, real estate.
Inflation Impact	Returns may not keep up with inflation.	Potential to outpace inflation and increase purchasing power.
Risk of Loss	Minimal risk of losing principal.	Risk of losing part or all of invested capital.