What’s the Difference Between Saving and Investing?

When planning for your financial future, chances are good that you hope to have more money tomorrow than you do today. Saving and investing are both tactics aimed at achieving this goal. However, these two methods are quite different from one another. When you invest, you are purchasing assets that you hope will increase in value over time. Investing has many potential benefits, but it can also come with risks. The professionals at Harvest Wealth Partners can work with you to discuss the risks and potential rewards involved in investments, so that you can make an appropriate plan for your unique situation. 

What is an Investment?

Investments are a broad category of assets that you can purchase in hopes that their value will increase. For example, stocks, bonds, mutual funds, real estate, and commodities are all different types of investments. Collectibles like baseball cards or wine can even be considered a type of alternative investment, because you can purchase them with the hope that they will be worth more than you paid for them at a later date.  

Some investments are generally regarded as safer than others, but all investments carry some degree of risk. For example, let’s say that you have purchased a baseball card with the hopes that you can sell it for a higher amount later. Perhaps the company who created the card prints several more runs of that exact card and, as a result, its value remains low. 

Similarly, if you invest in stock in a publicly traded company (for instance, Tesla, Google, or Disney), there is a chance that your stock will continue to gain value. In fact, according to Investor.gov, a resource of the U.S. Securities and Exchange Commission, “Stocks offer investors the greatest potential for growth (capital appreciation) over the long haul.” However, this is not always the case, and there is always the chance that your investment will lose value between when you purchase it and when you decide to sell.

One strategy to manage risk when investing is to diversify your portfolio. By investing in a variety of options, it can help manage the volatility of your portfolio (even if that means losing value in one place, and gaining it in another). An advisor can work with you to develop a long term plan to manage your wealth and investments and make steps towards your financial goals. 

Advantages and Disadvantages of Saving

Unlike an investment, when you save money in a bank account, you are able to access it at nearly any time. Saving is a simple way to accumulate money over time. However, the value of your savings may not always keep pace with inflation. If inflation outpaces the interest rate your money sees in a savings or checking account, then it essentially loses value. 

Many people choose to invest in hopes that the appreciation of their investments does outpace inflation, but there are still advantages to saving. Money that is in a bank account generally sees less risk than money that is invested in an asset, and because that money can be accessed at nearly any time, it will be available to you in an emergency situation. 

Wealth Management Services With Harvest Wealth Partners

There are many aspects to consider when it comes to deciding how to manage your wealth. If you have questions about saving and investing your money, the skilled professionals at Harvest Wealth Partners, LLC can work with you. To learn more or schedule a consultation, contact us today. 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. 

Investing includes risks, including fluctuating prices and loss of principal.​ No strategy assures success or protects against loss. 

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. 

Alternative investments may not be suitable for all investors and should be considered as an investment for the risk capital portion of the investor’s portfolio. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses. 

This material was prepared by NUVEW Web Solutions.