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Saving vs investing: Key differences

To save or invest? One golden rule is to save for what's around the corner and invest for the future.

This short guide explains the difference between saving and investing so you can work out which is right for you. 

(Spoiler alert! It may be a combination of the two.)

What is saving?

Saving is putting aside some of your money for the future. It's a type of investing that's considered fairly low risk. You might be saving for something specific, like higher education or a holiday. Or building a savings pot to cover any emergencies or unexpected costs you might face.

You can build your savings in one-off or regular payments. And if you use an easy-access savings account, you can get back what you put in, plus the interest you've earned, whenever you want it.

Although saving is regarded as low risk, the returns you'll get on your savings from interest can be modest, especially when interest rates are low. The inflation rate can also rise and reduce the real value of your savings and the interest you earn.

Putting money into savings may be suitable for people who:

  • Need or want easy access to their money
  • Don't like risk, and prefer the relative safety and predictability that savings provide
  • Are putting money aside from a young age
Deciding whether to save or invest your money should be based on your financial goals, as well as your personal attitude towards risk.

What is investing?

Investing also involves setting aside money for the future. However, with investing, you're putting your money into something where you believe the value will change over time. It can involve buying assets such as stocks, bonds, mutual funds or property, with the expectation that your investment will make money for you over a given period.

You invest money usually when you hope to make greater returns than you could by keeping your money in savings. There is a risk, however, because your returns are not guaranteed and you might get less back than the sum you invested in the first place.

Investing money may be more suited to people who:

  • Are comfortable taking the risk that the value of their investments could go down as well as up
  • Have money to spare and are able to set money aside for the medium or long term
  • Want to take a risk on making potentially better returns than they could achieve by putting their money into savings accounts

Saving vs investing – which one's right for you?

Are you trying to decide between saving and investing? It's easy to end up going around in circles when trying to decide on the best way to grow your money. Whether to save or invest will depend on your individual circumstances and the financial goals that you have set yourself.

Save for short-term goals

Savings held in one or more savings accounts may be the sensible choice. You can build an emergency savings fund to meet your financial needs if the unexpected happens, with easy access to that money. There's usually little risk that you'll lose your money. However, while interest rates may be low, returns on your savings may be modest. Remember that any interest you earn may not keep up with inflation.

Invest for long-term goals

Investing money may provide a better chance of achieving higher returns than keeping your money in savings accounts. If you don't need to access your money in a hurry, and can afford to tie it up over a number of years, investing can offer a better chance of keeping up with or beating inflation. When building your financial portfolio, you'll want to consider your risk appetite and financial goals.  


For many people, the answer to which is best for you is a blend of the two. For example, to build an emergency fund to meet unexpected costs, an easily accessible savings account would seem a sensible option. However, to achieve long-term financial goals, like saving for retirement, taking a degree of investment risk could earn you a greater return.

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Do you prefer more certainty in terms of investment returns? NRI deposits might be what you're looking for.
We explain the different types of savings accounts in India so you can decide which one's best for you.

Important information

This publication has been issued by The Hongkong and Shanghai Banking Corporation Limited (HSBC), India, Incorporated in Hong Kong SAR with limited liability, for the information of its customers only. This publication does not constitute investment advice or an offer to sell, or a solicitation of an offer to purchase or subscribe to any product / investment. The information herein is derived from sources believed to be reliable and the concerned Information Provider(s) have duly authorized HSBC to use such information provided by them. Whilst every care has been taken in compiling the information, HSBC and the concerned Information Provider(s) do not guarantee, or make any representation or warranty and accept no responsibility or liability as to its accuracy or completeness and shall not be liable for damages arising out of any person's reliance upon this information or any action taken or not taken as a result of any material contained in the publication. Expressions of opinion are those of HSBC and the Information Provider(s) only and are subject to change without notice. HSBC has not independently verified any information provided by the Information Provider(s) or that has been derived from the sources believed to be reliable by HSBC. Opinions expressed herein do not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this publication. This document is for circulation in India only. No part of this publication may be reproduced or stored in a retrieval system without the prior written permission of HSBC. Any liability is accordingly expressly disclaimed by HSBC, its officers, directors and employees.