Understand the difference between saving and investing

Saving or 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).

Short-term vs long-term savings

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:

  • Save money for your short-term savings goals
  • Invest money over the long term that you won't need for at least three years (and preferably five years or longer).
Short-term savings goals Long-term investing goals
Emergency cash
Car deposit
House deposit
Education funds
Retirement savings