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SAVING VS INVESTING ( which is better – saving or investing?)

Saving and investing are both important concepts for building a sound financial foundation, but they’re not the same thing. While both can help you achieve a more comfortable financial future, consumers need to know the differences and when it’s best to save and when it’s best to invest.The biggest difference between saving and investing is the level of risk taken. Saving typically results in you earning a lower return but with virtually no risk. In contrast, investing allows you the opportunity to earn a higher return, but you take on the risk of loss in order to do so.Neither saving or investing is better in all circumstances, and the right choice really depends on your current financial position.Generally, though, you’ll want to follow these two rules of thumb:•If you need the money within a year or so or you want to use the funds as an emergency fund, a savings account or CD is your best bet.•If you don’t need the money for the next five years or more and can withstand some losses in capital, then you likely should invest the money.Real-life examples are the best way to illustrate this, Keady says. For example, paying your child’s college tuition in a few months should be in savings — a savings account, money market account or a short-term CD (or a CD that’s about to mature when it’s needed).“Otherwise people will think, ‘Well, you know, I have a year and I’m buying a house or something, maybe I should invest in the stock market,’” Keady says. “That’s really gambling at that point, as opposed to saving.”And it’s the same for an emergency fund, which should never be invested but rather kept in savings.So if you have an illness, a job loss or whatever, you don’t have to resort back to debt,” Hogan says. “You’ve got money you’ve intentionally set aside to be a cushion between you and life.”And when is investing better?Investing is better for longer-term money — money you are trying to grow more aggressively. Depending on your level of risk tolerance, investing in the stock market, exchange-traded funds or mutual funds may be an option for someone looking to invest.When you are able to keep your money in investments longer, you give yourself more time to ride out the inevitable ups and downs of the financial markets. So, investing is an excellent choice when you have a long time horizon (ideally many years) and won’t need to access the money anytime soonWhile investing can be complex, there are easy ways to get started. The first step is learning more about investing and why it could be the right step for your financial future.@michaelamumm @iynna @teresaman
This isn't black and white, it all depends on anyone's individual situation and priority. This is in fact something we are discussing in the community this week for @bzzybee's question of the week https://elpha.com/posts/p0ficvo9/what-are-your-financial-goals
Thank you for your contribution dear friend...Definitely looking forward to the discussion
It's really important for women to know how the retirement investing differs between women and men. Women earn less money throughout their lifetimes, and because they are more likely to take career gaps and work part-time, they have less money in their government and corporate pensions, so have less money coming in after retirement. Women usually can't save enough for retirement, they need to invest in order to get there. The best thing you can do for your retirement is to start EARLY. $100 invested at 25 can turn into $1000 by 65 (at a 6.1% return after fees), but using the same assumptions - $100 invested at 45 only turns into $300 by age 65. TIME is your biggest advantage when it comes to investing. Lastly, studies show that women need to put 18%-20% of their after tax earnings into retirement funds in order to have the recommended amount for retirement. When you hear put 10-15% of your money into investments for retirement - that rule of thumb is geared to men. It completely sucks, but given how much time is a factor, it's better to know TODAY that the financial statistics are not in our favour, and while we advocate and demand change on things like gender pay equality, and the removal of the Pink Tax (we pay ~$2k/yr more for everyday items then men - including for financial products like mortgages and credit cards); we can also help ourselves by doing everything we can to set ourselves up for success. (This might mean saving less for retirement, and knowing you'll need a roommate in the future to reduce costs - this doesn't mean giving up what's important to you. It's about trade-offs and figuring out the best path for you with the best inforamtion).
Thank you for this
Well said - thank you so much for sharing!