To a simple layman on the street, there is little distinction between savings and investments.
Whereas in reality, there is a huge difference between the two terms. You save by trying to conserve resources and consumption using scale of importance and reference, while you invest to multiply the cash so that you can match your consumption as it inevitably increases.
Furthermore, you might have a bank account which you store money which is very okay, if you Remember that in the past, some persons use to safe money in cupboard, wardrobe, underground and etc
A savings account looks more safer when compared with mattress, cupboard, underground, however it is not different although they will pay you interest on your savings. So you think that your savings are guaranteed to grow and that makes you feel extremely good!
Wait until inflation attack your money in the bank. A classical example is saving 10million in the market in 2020 would have dropped in purchase power by 65%. Simply put, the 2 years inflation have made your money loss a value of over 6 million Naira.
However, the bank may pay you 5 percent interest a year on your money, if inflation is at 18% percent then to cap it inflation is increasing at a rate of 1.3% every month.
From the above analysis, you can see that there is a huge difference between savings and investing because savings is storing money safely, such as in a bank or money market account, for short-term needs such as upcoming expenses or emergencies.
While
Investing is taking a risk with a portion of your savings such as by buying stocks or bonds, in hopes of realizing higher long-term returns.
Best,
Ambrose Omordion
