Saver and Investor. Two words with similar meanings, but in reality, completely different.
They both have the same meaning in the sense of putting away or retaining funds for future benefit.
They have different meanings when we consider how our financial goals are to be achieved and are certainly different when we consider the potential results for our money.
To save is to put away, to protect. To invest is to take active steps to participate in investments where the funds will grow and be actively used.
My dictionary says that to save is to “rescue from danger, to keep for future use and to live economically”.
To invest is “to employ, to lay siege to, to use something, especially money, in order to gain a profit.”
What is the point?
The point is that whether we are saving for retirement or already retired we owe it to ourselves to have our funds working as hard as possible for us - within the bounds of sensible investment of course.
History has shown that, over longer periods, cash and fixed interest have struggled to beat inflation particularly if tax is taken into account. This is saving.
In contrast property and shares have shown much greater variance in returns over shorter periods but over longer periods have given solid returns to investors.
A growth element is crucial for those still accumulating a retirement fund. The end result should be many thousands of dollars larger. Merely saving is not an option. Investment is the only choice.
For those already retired the critical issue becomes protecting funds from the effects of inflation, which can be damaging, even at 2%, and ensuring that the funds last as long as is necessary. Investment is vital, not just saving.
To accumulate funds in a bank account (to save) is certainly an easier choice. It appears safe and returns are known in advance. To invest involves some uncertainty, a necessary commitment to a longer-term objective and often professional support.
The longer-term rewards of investing can be expected to make that extra effort worthwhile, however.
The mere fact that you have received this newsletter makes it likely that you are an investor, not just a saver. That is a good place to be if a comfortable retirement is your goal.
