Navegó a una página que no está disponible en español en este momento. Seleccione el enlace si desea ver otro contenido en español.
Página principal
If you’re not sure whether it’s time for you to start investing, or if you should focus on saving, the answer depends on your goals, risk tolerance, and financial situation.
The difference between saving and investing
- Saving — putting money aside gradually, typically into a bank account. People generally save for a particular goal, like paying for a car, a down payment on a house, or any emergencies that might come up. Saving can also mean putting your money into products such as a bank time account (CD).
- Investing — using some of your money with the aim of helping to make it grow by buying assets that might increase in value, such as stocks, property or shares in a mutual fund.
Should you invest now or wait?
You may want to consider starting your investment strategy after you’ve:
- Built your emergency savings. Savings should come first. Before investing, try to make sure you have a separate low-risk, low-return account you can use to cover expenses during an unforeseen event — typically at least three to six months worth of living expenses.
- Paid off high-interest debt. By paying off high-interest debt in full, you’ll reduce the total amount you owe faster and free up money to put toward savings or investing.
- Maxed out your 401(k) and IRA. If your long-term goals include a comfortable retirement and you’re already contributing the maximum amount to your retirement accounts, it may be an appropriate time to explore additional investment types.
Compare saving vs. investing
Saving
- For the short term. Typically for smaller, shorter-term goals in the near future like saving for a large purchase or for an emergency.
- Ready access to cash. A savings account can give you access to cash when you need it.
- Involves minimal risk. Your funds are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per FDIC-insured bank, per ownership category.
- Earn interest. You can earn interest by putting money in a savings account, but savings accounts generally earn a lower return than investments.
Compare savings accounts Investing
- Usually used for long-term goals. Investing may help you reach long-term goals, such as paying for a child’s education or planning for retirement.
- Longer wait to access invested funds. When you invest your money, depending on the type of investment, it may take longer to access your money compared to a savings account.
- Always involves risk. Investing does not guarantee a return, and it is possible to lose some or all of the funds invested.
- Earnings potential. Investments typically have the potential for higher return than a savings account.
Learn about investment typesGet prepared if you’re planning to invest
If it’s not time to invest yet, you may want to evaluate your financial priorities. One way is by using our My Money Map online tool — where you can track your spending, start a budget, and track savings in easy-to-understand charts.
Use My Money Map
Related Articles
- Saving for an emergency
- How to reduce your debt
- Creating a budget
Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company.
Deposit products offered by Wells Fargo Bank, N.A. Member FDIC.
Wells Fargo and Company and its Affiliates do not provide tax or legal advice. This communication cannot be relied upon to avoid tax penalties. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed.
Investment and Insurance Products are:
- Not Insured by the FDIC or Any Federal Government Agency
- Not a Deposit or Other Obligation of, or Guaranteed by, the Bank or Any Bank Affiliate
- Subject to Investment Risks, Including Possible Loss of the Principal Amount Invested
Retirement Professionals are registered representatives of and offer brokerage products through Wells Fargo Clearing Services, LLC (WFCS). Discussions with Retirement Professionals may lead to a referral to affiliates including Wells Fargo Bank, N.A. WFCS and its associates may receive a financial or other benefit for this referral. Wells Fargo Bank, N.A. is a banking affiliate of Wells Fargo & Company.
WellsTrade® and Intuitive Investor® accounts are offered through WFCS.
Information published by Wells Fargo Bank, N.A., Wells Fargo Advisors, or one of its affiliates as part of this website is published in the United States and is intended only for persons in the United States.
Investment products and services are offered through Wells Fargo Advisors. Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC (WFCS) and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company.
CAR-0623-03267
LRC-0123
FAQs
Saving is putting aside money to reach your goals. Investing is putting your money into something specific with the expectation that its value will grow over time, providing you with the opportunity to create more wealth.
Is it better to put money in savings or invest? ›
Saving is generally seen as preferable for investors with short-term financial goals, a low risk tolerance, or those in need of an emergency fund. Investing may be the best option for people who already have a rainy-day fund and are focused on longer-term financial goals or those who have a higher risk tolerance.
Which bank gives 7% interest on savings accounts? ›
As of May 2024, no banks are offering 7% interest rates on savings accounts. Two credit unions have high-interest checking accounts: Landmark Credit Union Premium Checking with 7.50% APY and OnPath Credit Union High Yield Checking with 7.00% APY.
What is saving vs investing for dummies? ›
Saving provides a safety net and a way to achieve short-term goals, while investing has the potential for higher long-term returns and can help achieve long-term financial goals. However, investing also comes with the risk of losing money.
What's the difference between saving and investing Quizlet? ›
What is the difference between saving and investing? Saving you are putting money away to keep and use later. Investing you are putting money in, hoping that it will increase.
What is one way that saving and investing are different? ›
The key difference is this: When you save money, you're putting your money somewhere safe to use for the future, often for short-term goals. Alternatively, when you invest money, you accept a greater potential risk in return for a greater potential reward. Investing often makes more sense for long-term goals.
Why saving is more important than investing? ›
Saving typically results in you earning a lower return but with virtually no risk. In contrast, investing allows you the opportunity to earn a higher return, but you take on the risk of loss in order to do so.
What is the 50 30 20 rule? ›
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
How much should a 30 year old have saved? ›
If you're 30 and wondering how much you should have saved, experts say this is the age where you should have the equivalent of one year's worth of your salary in the bank. So if you're making $50,000, that's the amount of money you should have saved by 30.
Does Wells Fargo have a high yield savings account? ›
Wells Fargo offers savings account options with APYs up to 2.51%, but to get the best rate, you'll need to deposit a lot of money. Key Takeaways: Wells Fargo offers two types of standard savings accounts, both of which earn interest. Interest rates on all Wells Fargo savings accounts are fairly low.
Our Top Picks for the Best High-Yield Savings Account Rates
- NexBank High Yield Savings Account: 5.26% APY.
- UFB Secure Savings: 5.25% APY.
- BMO Alto Online Savings Account: 5.10% APY.
- Betterment Cash Reserve Account: 5.50% APY for new customers' first three months, then 5.00%
- Synchrony High Yield Savings Account: 4.75% APY.
Can You Get a 7% CD Account? There was a lot of excitement in August 2023 about a few credit unions offering 7% APYs on certificates. But those rates were offered for a limited time only and are no longer available. However, the nation's best CD rates are still well above 5%, with some pushing toward 6%.
How much should I invest vs. save? ›
invest? How much to put toward savings versus investing depends on your current needs and your future goals. If you're unable to cover three to six months' worth of expenses with savings, it's best to prioritize that before beginning to invest for long-term goals like retirement.
What are two disadvantages of putting your money into savings accounts? ›
Among the disadvantages of savings accounts:
- Interest rates are variable, not fixed.
- Inflation might erode the value of your savings.
- Some financial institutions require a minimum balance to earn the highest interest rate.
- Some accounts might charge fees.
It's a good rule of thumb to prioritize saving over investing if you don't have an emergency fund or if you'll need the cash within the next few years. If there are funds you won't need for at least five years, that money may be a good candidate for investing.
What is the difference between saving and savings? ›
Saving refers to an activity occurring over time, a flow variable, whereas savings refers to something that exists at any one time, a stock variable. This distinction is often misunderstood, and even professional economists and investment professionals will often refer to "saving" as "savings".
What are the main differences between saving and investing in Ramsey Classroom? ›
You save money you plan to use in five years or less—for a phone, a car, or even college (if you're planning to go less than five years from now). When you invest, on the other hand, you do it for longer than five years—like 20-30 years or even longer.
What is the difference between saving and investment in macroeconomics? ›
By definition, saving is income minus spending. Investment refers to physical investment, not financial investment. That saving equals investment follows from the national income equals national product identity. Consider first an economy without government.
Is saving or investing riskier? ›
Investing: Putting Your Money to Work for You
Investing, on the other hand, involves putting your money into financial instruments like stocks, bonds, exchange-traded funds (ETFs), and mutual funds. Investing is riskier than saving, but can also earn higher returns over the long term.
