Savings & Investment: Key Differences

Saving and investing are both important ways to reach your financial goals and build a secure future. Knowing how to use each can help you make the most of your money.

Saving means putting aside some of your money now to accumulate more for the future.

Investing is the use of financial, material and labour resources to make a profit and add more value over time.

Learn more: Guide to online savings and deposits

Key features of savings and investment

By understanding these different features, you can choose the best options for your financial goals.

Comparison of features
Features	Saving	Investing
Purpose	Putting money aside for a goal, like buying a car, making a down payment on a house, or covering any emergencies or unexpected costs you might face	Growing your money
Suitable for	Those who want easy access to their money, and prefer the relative safety and predictability that savings provide	Those who love investing, are comfortable with risk, and want the chance to earn bigger returns
Method	- Keeping your money in cash - Depositing in the bank	- Buying gold, stocks, property or shares in a mutual fund - Investing in a business (opening a store, a company) that might build value
Safety level	Low risk	Varies (can be higher risk, depending on your choice)
Term	Short or long term	Usually longer term
Advantage	- Easily get back what you put in, plus the interest you've earned, whenever you want - Variety of easy and flexible ways to save	- Higher potential profits - Investment returns can grow faster than inflation
Disadvantage	- Returns on savings from interest can be modest (zero when kept as cash) - Inflation may rise and reduce the real value of your savings and the interest you earn	- Diversified risk level - Requires a certain understanding and risk management ability

Comparison of features
Features	Purpose	Purpose
Saving	Putting money aside for a goal, like buying a car, making a down payment on a house, or covering any emergencies or unexpected costs you might face	Putting money aside for a goal, like buying a car, making a down payment on a house, or covering any emergencies or unexpected costs you might face
Investing	Growing your money	Growing your money

Features	Suitable for	Suitable for
Saving	Those who want easy access to their money, and prefer the relative safety and predictability that savings provide	Those who want easy access to their money, and prefer the relative safety and predictability that savings provide
Investing	Those who love investing, are comfortable with risk, and want the chance to earn bigger returns	Those who love investing, are comfortable with risk, and want the chance to earn bigger returns

Features	Method	Method
Saving	- Keeping your money in cash - Depositing in the bank	- Keeping your money in cash - Depositing in the bank
Investing	- Buying gold, stocks, property or shares in a mutual fund - Investing in a business (opening a store, a company) that might build value	- Buying gold, stocks, property or shares in a mutual fund - Investing in a business (opening a store, a company) that might build value

Features	Safety level	Safety level
Saving	Low risk	Low risk
Investing	Varies (can be higher risk, depending on your choice)	Varies (can be higher risk, depending on your choice)

Features	Term	Term
Saving	Short or long term	Short or long term
Investing	Usually longer term	Usually longer term

Features	Advantage	Advantage
Saving	- Easily get back what you put in, plus the interest you've earned, whenever you want - Variety of easy and flexible ways to save	- Easily get back what you put in, plus the interest you've earned, whenever you want - Variety of easy and flexible ways to save
Investing	- Higher potential profits - Investment returns can grow faster than inflation	- Higher potential profits - Investment returns can grow faster than inflation

Features	Disadvantage	Disadvantage
Saving	- Returns on savings from interest can be modest (zero when kept as cash) - Inflation may rise and reduce the real value of your savings and the interest you earn	- Returns on savings from interest can be modest (zero when kept as cash) - Inflation may rise and reduce the real value of your savings and the interest you earn
Investing	- Diversified risk level - Requires a certain understanding and risk management ability	- Diversified risk level - Requires a certain understanding and risk management ability

Find out how long it will take for you to reach your target savings goal with our Savings Calculator.

Should you save or invest?

It's easy to be confused about whether to save or invest, and the best way to grow your money. The answer depends on your circumstances and short-term or long-term financial goals. These can include:

Short-term goals: buy a motorbike or a car, travel, celebrate a wedding
Mid-term goals: buy a home, pay for your children's education, start a business
Long-term goals: reach financial freedom when you retire

It helps to focus on balancing saving and investing by setting both types of goals.

If you're saving cash for the future, deposit your money in a bank to ensure safety and earn interest on your savings.

For higher gains, consider investing in different channels like real estate and stocks. But no matter what category you invest in, study your options carefully and allocate your money wisely.

The key to success is financial planning

At HSBC, we see a world full of potential. With our financial planning services, we can help you and your family start to build the future you've imagined. Everyone's priorities change as they go through life. We can help you ensure a seamless transition through each stage of your journey.