Understand the difference between saving and investing
Saving is when you regularly put money aside to use in the short term. Savers are concerned with protecting the value of their money in the short term (less than two years).
Investing is when you look for ways of making your money grow over the long term and are prepared to invest in higher-risk investments to get your money to grow over long-term periods (five years and more).
All investment goals have a time horizon, which is the period of time between the present and the time when you will use the money that you are now saving and investing.
Investment time horizon | Years |
---|---|
Short-term | 0-2 years |
Medium-term | 2-5 years |
Long-term | 5+ years |
When saving or investing money, you want to:
Short-term savings goals | Long-term investing goals |
---|---|
Emergency cash Car deposit House deposit Holidays |
Education funds Retirement savings |