Difference between Saving & Investing

The term Saving can be explained in the following manner-

excess income available to an individual or household after meeting current expenses. The current expenses could be in the nature of liabilities (Loan EMIs etc.) and expenses (groceries, day-to-day expenses, travel expenses). Traditionally, wants/ needs always exceed the means to meet them. The same is the case with savings. They are always scarce and seldom adequate to fund all the financial goals that an individual may have. It is important therefore to make most of the available savings. One way of doing this is to put the savings to work by investing it.

Investing is the term used to describe the activity of employing available funds (eg. savings) in suitable investment opportunities in physical and financial products with the intent of earning a return. The returns or gains made from investing along with the capital employed, are thus available to meet the goals.