Saving vs Investing: Understanding Key Differences and How to Choose


According to statistics, thirty (30) percent of Filipinos have savings while only ten (10) percent have at least one (1) investment. This only means that many Filipinos are still financially illiterate, living only from paycheck to paycheck. What’s worse, most of these individuals have more than two (2) loans, which gives them a hard time even saving money for emergency fund. 

So, if you’re one of the many Filipinos who are financially struggling to survive, understand the key differences between saving and investing first to know which one is suitable for your future goals and needs using this simple guide.

What Does Saving Mean?

In a financial context, saving means putting money aside in a financial institution or an act of not spending all of your money and setting aside some of it for future use. It can be putting money in a bank account, investing in a condo for sale in Philippines, stocks or mutual bonds, or contributing to a retirement plan or money market account. Saving also refers to an act of reducing your expenses, such as finding cheaper alternatives to things you buy, using less energy, or avoiding unnecessary spending altogether. 

Overall, saving money can be a great habit to have, but there are also both pros and cons to consider before diving headfirst into a savings plan.

Advantages of Saving

Financial Security

Having savings provides a buffer against unexpected expenses like car repairs, medical bills, or job loss. It gives you peace of mind knowing you can handle emergencies without going into high-interest debt.

Financial Goals

Saving also allows you to reach your financial goals, whether it’s buying a house or condo investment, taking a dream vacation, or retiring comfortably. The more you save, the faster you can achieve those goals.

Interest Earnings

Most savings accounts offer interest, which means your money grows over time. While the rates might be low, it’s still better than keeping your money in a piggy bank.

Building Good Financial Habits

Regularly saving teaches you discipline and delayed gratification. So, it encourages you to live within your means and avoid impulsive spending.

Disadvantages of Saving

Lower Returns

Compared to investments like stocks or bonds, savings account or retirement account typically offer lower returns on your money. Hence, your money may not keep up with inflation over the long term.

Temptation to Spend

Easy access to your savings can be tempting, especially if you face unexpected expenses or financial pressure. This can make it harder to stick to your long-term saving goals.

Fees and Minimum Balances

Some savings accounts like a checking account have fees or minimum balance requirements that can eat into your earnings. So, be sure to compare different accounts before opening one.

Opportunity Cost

When you save, you’re essentially putting your money on hold. This means you’re missing out on potential higher returns you could get from investing in other assets.

When is the Best Time to Save?

Apparently, the “best” time to save depends on several factors, including your income, expenses, financial goals, and risk tolerance. But always save money for emergencies and retirement. Whenever you have extra money, save for specific goals like a down payment for a condo or a car. 

Furthermore, consider increasing your savings when you get a raise, pay off your debt, or your expenses decrease. When saving, always start small, be consistent, and monitor your progress often.  

What Does Investing Mean? 

Investing, in a nutshell, is an act of committing resources (usually money) to something in the hope of generating a greater future return. It’s like planting seeds and expecting them to grow into a fruitful harvest.

There are many types of investments, each with its own set of risks and rewards. Some of the most common examples include stocks, bonds, mutual funds, cryptocurrency, commodities, private equity, and real estate.

Before you plan to invest money, make sure to consider the following advantages and disadvantages first. 

Advantages of Investing

Potential for Higher Returns

Compared to a savings account, having an investment account offers the potential for significantly higher returns over the long term. Stocks, for example, have historically averaged returns of around 7% per year.

Growing Your Wealth

Investing can also help your wealth grow and ensure you have more purchasing power in the future by outpacing inflation. This can be crucial for long-term goals like retirement.

Generating Income

Some investments, like bonds and dividend-paying stocks, offer regular income streams that can supplement your salary or even replace it in retirement. Thus, it provides additional cash flow.


Investing allows you to spread your risk across different asset classes like stocks, bonds, and real estate. Therefore, it also helps mitigate the impact of any one asset underperforming.

Compound Interest

Reinvesting your earnings (including dividends and interest) can also create a snowball effect wherein your money grows at an accelerated rate over time.

Financial Independence

Of course, investing can help you achieve financial independence by accumulating enough wealth to cover your living expenses without relying on a job. So, it gives you a sense of accomplishment and control over your financial future.

Disadvantages of Investing

Risk of Loss

Unlike savings accounts, investments are not guaranteed to grow. The value of investments can fluctuate, and you could lose money if the market falls or if you choose poorly. However, this risk varies depending on the type of investment you choose.

Market Volatility

Financial markets, such as the stock market, can be volatile, meaning prices can fluctuate significantly in the short term. This can be stressful and lead to emotional investment decisions.

Time Commitment

Successful investing often requires time and effort for research, analysis, and portfolio management. This might not be feasible for everyone. Therefore, you must have the knowledge and experience as well. You must have the ability to understand financial markets and investment strategies. Making uninformed decisions can lead to losses.

Fees and Expenses

Depending on the investment type and platform, you may incur fees, like management fees, transaction fees, or commissions. And, these can eat into your returns.

Temptation to Panic Sell

Unfortunately, the excitement of the market can lead to impulsive decisions and excessive trading, which can increase your risk of losses. As a result, this can cause damage to your long-term investment success.

When is the Best Time to Invest?

Similar to saving, investing also depends on several factors. You must keep in mind that the market is constantly evolving. And, what might be a good time for one person could be a bad time for another, even for seasoned investors. 

But in general, you can invest as soon as you can if you have extra resources, or if you are aiming for a long-term perspective. Seek professional advice if needed, especially if you’re new to investing or have complex financial goals. Educate yourself about different investment options and their risks and potential returns. Mostly, have a clear investment plan and stick to it for the long term.

Whether you plan to save or invest, be sure to look for the best value for money and one of the best options you can consider is real estate. Having an asset like an value-priced condominium unit offers a lot of potential including income generation and profitable returns even in a volatile market.

Nevertheless, always aim for long-term growth and higher potential returns. Start with a condo for sale and consider Asterra, the latest and pre-selling condo in Philippines, suitable for young achievers and growing families, planning to save or invest their hard-earned money. Get in touch with one of our sales marketing representatives online for more info and inquiries.  

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