PF 8.01 (Savings & Investing) By PresenterMedia.com

Definition Saving is setting aside present income for future use. Investing Saving is setting aside present income for future use. Savings is the portion of income not spent on consumption. Investing is putting money to work so that it earns interest over time. Investments are assets purchased with the goal of increasing income.

Primary Purpose To make money available for future needs Saving Investing To make money available for future needs To make a profit over time

Reasons for doing so… To prepare for emergencies Saving Investing To prepare for emergencies To prepare for major purchases To achieve financial goals To pay recurring expenses To prepare for future purchases To prepare for retirement

Interest Earnings A bonus or side-benefit The main focus Saving Investing A bonus or side-benefit The main focus

Return Usually earns lower rates of interest Saving Investing Usually earns lower rates of interest Usually earns higher rates of interest

Liquidity Money may be withdrawn at any time Saving Investing Money may be withdrawn at any time Money may not be easily accessible

Volatility Usually not volatile; rates are fixed Saving Investing Usually not volatile; rates are fixed Rate of return and value may change suddenly and significantly

Risk Usually little risk of losing money Saving Investing Usually little risk of losing money Usually more risk; risks may be necessary to make a profit

Questions about the difference between saving and investing?