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Saving, Investing and Trading- The Difference

Saving:

The basic difference between saving and investing is of the returns. Although many people consider it as one the diversified investment portfolios but it is not exactly so. Saving is like a reliable backbone especially in the times of need. It is the most important part of income. Maybe not frequent and large amount but a consistent and fixed amount should always be saved for financial continuity of oneself. Saving is primarily done for unexpected future needs as well as for some known future expenses like wedding, education et cetera.

Saving doesn’t brings you as much profit as investment does but saving gives you a great support. It has no risk unlike investing and trading. Also, it is of short period of time and except in some cases, saved amount can be withdrawn anytime which is not the case of investing and trading. It can be done by saving it in various types of bank accounts, like

1. Savings account

2. Fixed deposit

3. Money market account and many more.

Investing:

Investing is all about creating a colossal income which can be availed after a fixed long term. Generally there is a misconception regarding investing and it is confused as a type of saving. But this is not the case. Investing, unlike saving and trading, is a long term process. It also include a high level of risk as compared to saving and trading. It seems quite obvious as investing has much increased level of returns than saving and trading. There are diversified investment portfolios which can assure you the diversification of your risk and profit while investing. Diversified investment portfolios includes-

1.    Stocks- One way of investing is buying shares of a stock from a stockholder. It means you’re now the shareholder of the particular stock. As per your budget and stockholder’s rules, you can own a good percentage of share of a stock. Particular share will earn you a guaranteed proportion of that stock. It too has diversified investment portfolios like, common stocks and preferred stocks.

2.    Bonds- By the purchase of a bond, either from government or private body, you become the bondholder. It is also for a fixed period of time and your money along with the money of many other bond purchasers are invested by the issuer of bond. In lieu you get its fixed interest rate.

Investing money via diversified investment portfolios also provide you a financial relaxation. Also, risk is not diverted in just one direction. Another interesting way is online investment. Now, how to invest money online? There are online brokers and certified agents who can help you with the question of how to invest money online.

You just need to make wise and correct decision while investing online or on any platform. They will also solve all your queries related to how to invest money online. Go only for certified sites and agents and it will fetch you guaranteed returns.

Trading:

The basic definition of trading says- buying and selling of goods. This method of earning is quite different from investing and completely different from saving. While saving is the storage of money, trading is a way of using that money for extra profit.

Though, in both trading and investing, we primarily use money to make money but trading is a short term process, maybe of few days even, whereas investment is for a long period. Trading does include risk but less than investing. If trading is a skill then investing is an art. While trading can even be of one day, investment is a long drawn process and requires great patience for profit.

On one side, saving is completely different from investing and trading as it does not include the usage of money to make money. Instead a particular amount of money is just saved for future purpose. Whereas on the other side, trading and investing includes putting money into another zone for further wealth creation. Also, trading and investing are different process on the grounds of time period and amount of risk involved.

As investing is a long term process with greater amount of risk involved as compared to trading. Basically all the three aspects are different from each other at many points and it depends upon the individual what he chooses.