Saving vs Investing - what is the difference?

The team at Bogetto & Associates have been providing financial advice in St Louis since 1990.  We really enjoy meeting with our clients to listen to their financial goals and helping them towards achieving those goals.  Often, when we meet with our clients, they have questions about financial planning and what certain terms mean.  One question we often get is about "saving" versus "investing."  Here are the differences between these two financial concepts:

Risk

The level of risk between saving money versus investing money is a large difference.  When you save money, you typically are going to be putting it into a savings account, a certificate of deposit (CD), or in a money market account.  The very nice thing about putting money into a savings account, CD, or money market account at a bank is that it will be insured by the Federal Deposit Insurance Corporation (FDIC).  If anything happens to the bank, your money will be insured to at least the $250,000 level and sometimes higher.

Investing on the other hand will involve higher risk.  You are investing your money towards the future of an entity such as a corporation, a commodity, or a market sector for example,
and you are "betting" that you will get a return on your investment.  The potential for a higher return is there, but the potential to lose some (or all) of your return is also a possibility.  This is where sound financial advice is critical and Bogetto and Associates can help you look at your investment options.

Access to your money

The ability to quickly access your money is another difference between saving and investing.  When you save money in a bank account, CD, or money market certificate, you can get access to your money relatively quickly.  Saving money is typically done to reach short term goals such as vacations, buying merchandise, or for emergencies.  Most financial advisers recommend having a six month emergency fund available in case you lose your job or have a medical issue.  

When you invest, gaining access to your money quickly can be harder.  This is particularly true if you are investing in retirement accounts such as an Individual Retirement Account (IRA) or similar.  You can access your money if needed, but there may be large penalties for withdrawing money from these accounts early.  Again, check with your financial adviser to see what your options are.

Advantage of doing both saving and investing

Saving and investing should be a combined strategy of your financial planning.  Making sure you have enough money on hand to handle any of life's emergencies for you and your family is extremely important, but thinking of the long term financial "big picture" is equally as important.  If you invest wisely, your return on your investment can potentially be larger than the interest you would receive on a savings account.  By taking a close look at your individual financial position, you can make good decisions on what money is available to put into savings, and what can be invested.  

Bogetto & Associates can help

Contact us and we can help you look at your current financial status and provide advice on ways that you can both save and invest.  We have been helping with financial planning in St Louis for many years and we listen to each and every client.

Financial Health...For Now & Tomorrow

Contact us Today

Website - www.bogettoandassociates

Telephone - 314-858-1602

Email - peter@bogettoandassociates.com

10805 Sunset Office Drive, Ste. 202

St Louis, MO 63127

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Securities offered through First Heartland Capital, Inc. Member FINRA/SIPC

Bogetto Financial is not affiliated with First Heartland Capital, Inc.