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SAVING VS INVESTING | Understanding the Key Differences

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SAVING VS INVESTING | Understanding the Key Differences


Saving vs investing... Should you save or invest? In this video, we are going to cover the key differences and why we should be engaged in both to put ourselves in the best position financially.

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0:00 Intro
0:35 Saving
0:51 Investing
1:30 The Power of Investing
3:00 The Importance of BOTH
4:00 What's Your Risk Tolerance?
4:48 An Easy Way To Get Started With Investing
5:04 3 Main Takeaways
5:46 Investing And Exponential Growth
6:16 Risk is the Most Influential Factor
6:53: Outro

My name is Josh, and I make videos on investing, personal finance, online business, and entrepreneurship. I'm huge on transparency and want to be straightforward here... I don't know everything, but I do have my own personal experiences and research to help lay this out for you.

Everyone has a reason to save money. Maybe you're looking to buy a car, a house, a pet, or perhaps you're looking to save for your future. Either way, saving money allows us to have it when we need it. Keeping your money in the bank provides liquidity. You can withdraw at any time.

Investing, on the other hand, is typically for the long term. You put your money into investment vehicles with the expectation of gaining returns in the future. Now, it's essential to understand the different investment vehicles and how to use them to be successful. There are many vehicles to choose from, but in this video, I'll be using the S&P 500 Index Fund as my vehicle to help illustrate your potential with investing. In case you don't know, the S&P 500 is a stock market index that measures 500 large companies' stock performance in the United States.

Let's give an example of how investing can dramatically increase your returns rather than only saving money in a bank account. So, I have two friends: Alex and Jake. They are both 25 years old and want to retire at 60. They both make $50,000 per year. Alex only wants to invest 25% of his income, and Jake only wants to save 25% of his income. Alex decides to invest in an S&P 500 Index fund than has an average return of 7% per year. After 35 years, Alex ends up with well over $1,000,000 for retirement while Jake ends up with only $350,000. Using this example, we can see that time is your best friend when it comes to long term investing. Now, of course, saving and investing come hand and hand because you can't invest if you don't have any money saved. You also need to have an income to be able to save. I used to have a lot of trouble with saving...

The most significant key difference between saving and investing is the risk involved. You save when you put your money in a savings account, which has little risk and minimal gains. When you invest, you have the potential for high returns, but also the potential for loss. It's important to review your goals to determine what approach is best for your situation.

Either way, do not wait to start saving or investing. Time is your best friend when it comes to growing your money and meeting your goals. Personally, I've saved up 6 months' worth of expenses, and I've been investing weekly because I believe that is what I need to do to reach my financial goals. If you're interested in getting started with investing, there are many ways to go about it. An easy way to get started is by downloading the Robinhood app. I have a link in the description below, along with a video explaining how to get started.

There are the three takeaways that I want you to remember from this video...
1) Saving money allows us to have it when we need it most—many financial gurus recommend having 3-6 months of expenses saved. That way, you are ready for any unexpected emergency or situation that gets thrown your way.
2) Investing long term presents the opportunity for exponential growth. There are many investment vehicles to choose from: high-yield savings accounts, CDs, Money market accounts, S&P 500 index funds, Dividend stock funds, and real estate. Do lots of research and make a decision that works best for you.
3) Risk is the most influential factor when determining whether to save or invest. Personally, I think everyone should be engaged in both saving and investing to secure our financial futures.

Welcome to Bread Chasers! I have a passion for helping people become financially free through online business, personal finance, investing, and entrepreneurship! I post new videos every week so don't forget to click 'Subscribe' and drop a 'Like' if you found any value in this video

Side Note: These videos are for your personal entertainment. I am not a certified financial advisor.

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