What is Investing?
Investing is a means to generate additional income or profit from the allocation of money and resources. Investment can be in the form of using money to kick start a business, purchase real estate, or other investment endeavors on the expectation that it will generate income for you. Investment can also involve specific end goals such as a 401K for retirement. A college education can also be considered an investment because you are investing time and energy (your resources) in hopes of earning a degree to enhance your job career.
Now that we have defined what it is to invest. We also should discuss what it is to save. Saving money in this case. Saving and investing are often used interchangeably and both are very important for financial stability, but there are key differences.
Saving has little to zero risk but provides you with a meager return. But that's the point. It is the act of setting aside money you do not spend now so you can use it for future emergencies or purchases. This money you can access quickly, with little or no risk. This is usually coined in "Putting away money under the mattress". A more sophisticated means is through a savings account. One downside of saving is inflation. The money you save will decrease over time. Later in this article, we will discuss inflation in detail and how it affects you.
Investing, on the other hand, allows you to earn a potentially higher return but the risk is higher. The act of buying assets such as stock, bonds, mutual funds, or real estate with the expectation that your investment will make money for you. Investment is not guaranteed but it has more potential upside than savings alone.
Read the full article here: Investing 101