Savings Account

Difference Between Savings & Investing

3 min read

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Feb 3, 2023

Differences Between Saving and Investing
How Much Should You Save and Invest?

Building a solid financial foundation requires a combination of saving and investing. However, the term ‘saving’ and ‘investing’ are often used interchangeably. While both assist you in strengthening your finances, there are significant differences between the two. And understanding the concepts in detail is vital to success.

Let’s take a detailed look at the difference between saving and investing to help you build a solid financial plan-

Differences Between Saving and Investing

Sr. No	Parameter	Saving	Investing
1.	Meaning	Gradually putting aside money after taking care of all the basic expenses	Putting some of the money in financial assets or products to generate returns
2.	Risk	Minimal to zero	High (ranges from low-risk to high-risk based on the selected asset/product)
3.	Goal	Mostly to take care of significant expenses and unforeseen situations	Capital appreciation and wealth creation
4.	Liquidity	Highly liquid	Lower liquidity compared to saving
5.	Time Horizon	Generally short-term	Long-term (3 years or more)
6.	Returns	Specified ROI (generally through interest income)	It can vary as per market volatility
7.	Type of Asset	Short-term assets that can assist in fulfilling goals like purchasing a car, home appliances, etc.	Long-term assets that can help with long-term goals such as retirement, your child’s higher education, purchasing a house, etc.
8.	Protection Against Inflation	To an extent	Highly effective in beating inflation

How Much Should You Save and Invest?

Now that you know some of the most significant saving vs investing differences, let us find out how you should divide your earnings between the two and when and where you should begin.

Saving and Investing- The Rule of Thumb

So, how much percentage of salary must be invested? As every individual is different and so are their saving and investment needs, there’s no rule of thumb regarding how you should divide your money between the two.

When to Start Investing?

It is essential to have some liquid money with you to keep yourself prepared for unforeseen events. But once you believe you have enough savings (enough to manage 6 months' expenses), you should focus more on investing to start working towards your long-term financial goals.

Be it saving or investing, ensure you begin as early in life as possible, as time significantly impacts the potential returns you can generate. So, even in your 20s or 30s, you should start working on your saving and investment plan to strengthen your financial future.

Where to Save and Invest?

People generally rely on a Savings Bank Account to deposit their savings. The account provides easy access to your funds while also generating interest on the deposited funds. So, to start saving, you can open a High-Interest Rate Savings Account with AU Small Finance Bank. The bank offers high interest rates. Apply now.

When it comes to investments, some of the most popular options are stocks, mutual funds, government schemes, gold, and real estate. You can consult an investment advisor who can assist you in building an investment portfolio that matches your investor profile.

Start Saving with AU Small Finance Bank

AU Small Finance Bank, the Largest Small Finance Bank in India, offers an extensive range of Savings Accounts, like AU Savings Account, AU Salary Account, AU Women Account, AU Sr. Citizen Account, AU Digital Savings Account, and many more. With highly competitive interest rates and innovative features, the Savings Accounts from the bank can be an ideal saving companion.

Moreover, the Leading Small Financial Bank also offers seamless access to a host of investment products, including Mutual Funds, National Pension System, Atal Pension Yojana, and more, making it a one-stop saving and investing solution.

* Terms and Conditions apply. Rates are subject to change at the sole discretion of AU Small Finance Bank.

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