Both involve keeping a portion of your income aside for future use, but investing targets growth so your money actually makes more money - and it’s easier than you think.
Prudence Thipe, the general manager at Old Mutual, says understanding the difference between the two is the first step toward realising your financial goals. “Saving simply means not spending. So, if you put money away each month in a jar or under a mattress you are saving but it won’t grow. Investing is the next step - it’s what you do with that saved money, and how you grow it.”
This is where many of us fall short, she said. “The latest Old Mutual Savings and Investment Monitor, revealed that 76 percent of black households used informal savings vehicles like stokvels, unbanked cash savings, grocery schemes and burial societies with 34 percent of stokvel assets unbanked or held in cash. But choosing inappropriate investment vehicles for savings means you won't generate returns that will grow your savings.
“For example, if you need quick access to your savings - or liquidity - you need a savings product that allows this. Think of a money-market bank account or fixed income unit trust.