difference between savings and investment

Making The Right Choice For Your Financial Goals

Hey there, friend! Are you puzzled about where to keep your hard-earned money safe while getting good returns? We all want to make our money work for us, but how? Well, you've got two main paths: savings and investment. Now, don't start scratching your head. Even though they might sound complicated, savings and investments are simply ways to help you achieve your financial dreams, be it buying that bike next year or owning a house down the road. Understanding what is saving and investment and how they work can be your ticket to financial success. So, stick around, and let's dive right into it!

What is Savings? 

First things first, let's talk about savings. Savings is like putting your money in a safe box, but with some interest on top. Think of it as the "slow and steady" route to grow your funds. Usually, people use savings for short-term goals, like buying a new phone or going on a holiday.

There are different types of savings accounts like regular savings, fixed deposits, or recurring deposits. Regular savings accounts are easy to access, and you earn some interest. Fixed deposits lock your money for a set period, usually giving a higher interest rate. Recurring deposits allow you to save a little every month, earning interest as you go.

Here us a detailed look at these accounts for your reference:

1. Regular savings account:

Description: The most common type, offering easy access to funds and a modest interest rate.

Benefits: Suitable for everyday banking, online transactions, ATM withdrawals, and basic saving needs.

2. High interest savings account:

Description: Offers a higher interest rate compared to regular savings accounts.

Benefits: Ideal for those looking to earn more on their savings without taking on additional risk. Often comes with some restrictions on withdrawals to maintain the interest rate.

3. Senior citizen savings account: 

Description: Designed specifically for individuals above a certain age, usually 60 years or more.

Benefits: Additional interest rates and special privileges like priority banking, tailored to the needs of senior citizens.

4. Children's savings account:

Description: Aimed at minors, often managed by parents or guardians until the child reaches adulthood.

Benefits: Helps inculcate saving habits at a young age and often comes with educational tools or incentives that make saving fun and engaging.

Each of these types caters to specific financial needs and life stages, allowing individuals to choose the one that aligns best with their goals. Whether for daily use, growing savings, or catering to the unique needs of specific age groups, savings accounts play a vital role in financial management.

What's great about savings in a 0 balance account? Safety and accessibility! Your money's there when you need it, and you know exactly how much it will grow. Perfect for those short-term dreams! In case you're looking for options, Kotak811 has the perfect zero balance savings account with the ActivMoney feature. With it, your savings can earn up to 7% interest over a certain number of days. The best part? The money is in your savings account and can be uses anytime you like, no charges or penalties.

Must Read: 6 Reasons Why You Should Start Investing Early

What is investments?

Now, let's crank things up a notch and talk about investments. Investing is like planting a money tree and watching it grow over time. It's all about putting your money into things like stocks, bonds, mutual funds, or real estate that might grow in value over the long haul.

1. Stocks: Owning a tiny piece of a company. High potential for growth, but a bit risky.

2. Bonds:  Lending your money to a company or government for interest. Safer than stocks but with moderate growth.

3. Mutual Funds: A mix of stocks and bonds managed by experts. Great for beginners with varied risk levels.

4. Real Estate: Investing in property. Often seen as a stable investment over the long term.

Investments are the game for long-term goals, like retirement or buying a house years from now. It can be a thrilling ride with the potential for higher growth, but it comes with risks too. Your money can grow big, or you might face some losses.

But don't worry! There's something for everyone, from the cautious player to the adventurous risk-taker. Just remember, investment savings is like a marathon, not a sprint. It's all about the bigger picture and those grand dreams down the road!

So, now you know the basics of savings and investments. Ready to take the next step? Let's keep going!

Comparing savings and investments 

Now that we've got the low-down on savings and investments, let's put them side by side and see the difference between savings and investment. Both paths have their own charm, but they're suited for different situations. Let's break it down:


Savings: Low risk. Your money's safe and sound, like a well-guarded treasure.

Investments: Higher risk. There's a chance for big growth, but also some risk of losing money. It's a bit like playing a thrilling game - there's excitement, but you have to be careful!


Savings: Steady and predictable. The returns might be lower, but you know what you're getting, like your favourite comfort food.

Investments: Potentially higher returns, but they can fluctuate. It's a roller coaster ride, with highs and lows that can be thrilling or scary!

Liquidity (or How Fast You Can Get Your Money)

Savings: Quick and easy. You can grab your money whenever you need it.

Investments: Slower. Selling an investment might take time, like waiting for your favourite cake to bake to perfection.

When to choose savings

  • For short-term goals or if you need to access your money quickly.
  • If you want the peace of mind knowing your money is safe.
  • If you're just starting and want a gentle introduction to managing money.

When to choose investments

  • For long-term investment goals where you can wait and watch your money grow.
  • If you're willing to take some risks for potentially bigger returns.
  • If you've got specific big dreams like retirement or buying a house, and you want your money to work harder for you.

Must Read: Liquid Funds vs Savings Accounts: Comparing Investment Options

Final word:

So, there you have it! Think of savings as the dependable friend you can always rely on, and investments as the adventurous buddy who's up for some excitement. Depending on your goals, timeline, and how much risk you're comfy with, you can choose one, the other, or even a mix of both!

The main thing is to know yourself and your dreams. Once you do, whether it's savings or investments, you're on the right track to making those dreams come true!

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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.