Investing versus Saving.
The Difference Impacts Your Wealth.
We often hear financial advice in the form of tidy soundbites: “Start saving early.” “Invest in the market.” “Put aside 10% of your paycheck.” But few of us pause long enough to think about what these terms really mean — or to understand how choosing between saving and investing can be the defining factor in whether your money grows or simply sits still.
As someone who has spent decades in the world of finance — from Wall Street boardrooms to the dining rooms of women trying to make sense of their 401(k)s — let me be clear: the difference between saving and investing is not semantic. It is strategic. It is powerful. And it is essential.
This post isn’t just a comparison. It’s a call to rethink how you manage money, how you define security, and how you build wealth — sustainably, smartly, and intentionally.
Let’s Start with Definitions
Saving is setting aside money in a safe place — often a savings account or certificate of deposit — where the principal is preserved, but the return is negligible.
Investing is deploying your money into vehicles like stocks, bonds, real estate, or mutual funds with the goal of generating a higher return, knowing that it involves some risk to your principal.
That’s the basic framework. But we’re going deeper.
Why Saving Feels Safer — And When That’s a Problem
There’s a reason so many people default to saving: it feels tangible. You see the number in your bank account. It doesn’t go down unless you spend it. There’s a sense of control, certainty, and safety.
But here’s the problem: safety has a cost, and that cost is often your future financial freedom.
With inflation currently around 3–4%, a savings account earning 0.01%–1.5% interest is actually losing purchasing power every single year. That $10,000 in your account today will buy you much less in 10 years — even if the number itself hasn’t changed.
Saving might feel like standing still. But when inflation enters the picture, it’s actually moving backward. See “Inflation is the silent killer of your financial wealth.”
Use Savings for What It’s Meant For
We are not anti-saving. In fact, savings are essential — for the right reasons.
You should absolutely have an emergency fund — typically 3–6 months’ worth of expenses in cash or cash-equivalents. You should also save for short-term goals — a house down payment, a wedding, a car — when you need access to the money in under 2–3 years and cannot afford market risk. See “If you have an extra $1, invest it.”
But beyond that, your money should be working for you — not sitting idle. See “Put your money to work by investing it.”
Investing Is Not Gambling — It’s Growing
The biggest myth I hear, especially from first-time investors (and yes, especially women), is: “Investing feels like gambling.”
That couldn’t be further from the truth — assuming you understand the rules of the game.
Gambling is zero-sum. You bet, you win or lose, and it’s over. Investing is about calculated risk, time, diversification, and discipline. The longer your time horizon, the greater the power of compounding. See “Investing is not gambling.”
The Power of Compounding — A Simple Example
Let’s say you invest $10,000 at a 7% average annual return (roughly the long-term average return of the S&P 500).
After 10 years: $19,671
After 20 years: $38,696
After 30 years: $76,123
And if you contribute an additional $6,000 per year, or $500 per month? After 30 years: well over $500,000!
That’s not magic. That’s math. That’s compounding — the interest your money earns, then the interest your interest earns, again and again.
Compounding is magical and is what makes your wealth grow. Understand it. Knowing how compounding works will make all the difference for you. See “The Savvy Investor's Secret Weapon: Understanding the Potential of Compound Interest.”
The Emotional Side of Saving vs. Investing
We don’t talk enough about the emotional side of financial decisions. People save because it feels safe. They invest because they want growth. But beneath both are deeper psychological scripts:
“I don’t trust the market.”
“What if I lose it all?”
“I want to protect what I have.”
“I never learned how investing works.”
These aren’t just financial barriers — they’re emotional and educational barriers. And that’s okay.
It’s why I spend time not just teaching numbers, but building financial confidence. You don’t need a finance degree to invest. You need patience, perspective, and a plan.
See “Have a Strong Investing Mindset”, “The right mindset is the most important piece of the investing puzzle” and our course “The Investing Mindset.”
But What About Market Crashes?
Yes, markets go down. 2008. 2020. Even 2022.
But volatility is not the same as loss — unless you sell.
If you invested $1,000 in the S&P 500 at the worst possible moment — say, just before the 2008 crash — and held on until 2021, your investment would still have tripled.
The key is time in the market, not timing the market. The biggest investing mistake people make is pulling out when it feels scary — and missing the recovery. See “You cannot time the market… So don’t.”
Ignorance Is the Enemy
Too often, I hear: “I’m just not ready to invest. I don’t understand it.”
But here’s the truth: You don’t need to understand everything — you just need to understand enough to start.
You don’t have to pick stocks or time markets. You can invest in low-cost index funds. You can set up a monthly auto-transfer into your Roth IRA or 401(k). See “Why Women Should Invest in the S&P 500 Index.”
Doing nothing out of fear is a decision too — and it’s one that often leads to missed opportunity.
Saving Keeps You Afloat. Investing Builds the Boat.
Let me offer an analogy I use in workshops.
Imagine you’re at sea.
Saving is your life vest. It keeps you from drowning when the waves hit — when a job is lost, a medical bill shows up, a car breaks down.
But investing? That’s your sailboat. It doesn’t just keep you afloat — it gets you somewhere. It uses the wind (even the choppy winds) to move you toward a destination.
And you need both.
Why Most People Save Too Much — and Invest Too Late
Study after study shows that many people — especially women — are more likely to keep the majority of their money in cash.
Part of this is cultural. Part is access. And part is lack of education.
But the consequences are real: they end up with less retirement savings, less generational wealth, and more financial anxiety.
If we want to change that — as individuals, as communities — we need to shift the mindset from preservation to growth.
Final Thought: It’s Not Either/Or — It’s Yes/And
Let’s stop pitting saving against investing. You need both. But you need them in the right measure, for the right goals, and at the right times.
Saving protects you.
Investing transforms you.
And your financial future deserves both.
“Financial freedom is available to those who learn about it and work for it.”
— Robert Kiyosaki
Check out our website SHALnCO for more resources on investing, including courses and eBooks, our weekly Substack newsletter and products.
Nothing in this email is intended to serve as financial or investment advice and you should do your own research and consult with appropriate advisors.