Investing over saving

Saving is a good way to save your money for short-term matters, but investing is the best way to grow your wealth over a long-term period.


Keeala Walsey, Writer

Investing rather than saving money is better for your financial life. People say that if you have a job you should put at least 10-15 percent of your salary into your savings account. Whether this is for your retirement or saving it for an emergency, saving it should not be your only option. 

When saving your money, what banks usually should tell you is that you’ll get an interest rate of money, an annual percentage yield. Meaning that each year, depending on what your bank’s percent interest rate is, you’ll be getting money from your bank that goes into your savings account, but when there is inflation that is higher than your interest rate then you start losing your purchasing power. Purchasing power is referred to as the amount of goods or services that can be purchased with a given amount of money. When this happens and your money is just sitting in the bank, you slowly start to lose that purchasing power you had in the beginning.

You can save and invest at the same time, but more of that money should be invested rather than saved. When you are younger it’s ok for you to take risks in investing because you have more time to be able to win or lose in the stock market.

Over time because of inflation, the cost of living will soon go up, this includes housing, cars, food, and clothing. As mentioned before your purchasing power will decrease, with investing this could help you stay ahead of inflation and provide you with higher returns than saving can.

Investing is better for your financial life, but you would have to be willing to cut back on your spending, either weekly or monthly. It’s better to be able to grow your money than lose it.

Another reason that taking risks at a young age is ok is that you have diversification. When investing, you are allowed to buy different types of assets, such as stocks, bonds, and real estate. You can also invest to get either wins or losses, but reduce the risks of loss, and increase the potential returns you’ll get. 

Investment will come with risks that most of the time you can’t guarantee that you’ll make money. It is important that you do your research on the risks and rewards that both saving and investing have. Warren Buffett said to investors “fearful when others are greedy, and greedy when others are fearful.”