Not all of the money that one earns is spent, but a certain part of it is usually saved to meet future expenses. One can utilise these savings instead of keeping it idle by investing it. Investing the saved money helps get some sort of returns in the future.
The terms “savings” and “investments” should not be confused. Saving is the process of putting cash aside so that you can grab it whenever you need it. It can include cash in hand, bank deposit, or pension account, etc. On the other hand, investment is the process of using the saved money to buy an asset that one thinks will generate a safe return over time. It includes investing in equities or stocks, property, bonds, mutual funds, public provident funds etc.
While savings offer instant access to your money at any time, in investment the money is parked for a specific period. In other words, savings are made for short term while investments are mostly made for longer term. Savings carry zero risk of erosion. Investments carry a greater chance of losing money but the risk is taken in anticipation of higher returns and compound wealth in the future. While savings help in meeting emergency situations, Investments hold the key to your future.
Rather than keeping the savings idle, it makes sense to invest it so that some money can be earned. Investments can be made at any time though early and regular investments will reap you good returns in the long run