Motilal Oswal Asset Management Company Ltd. (MOAMC) is a public limited company incorporated under the Companies Act, 1956 on November 14, 2008, having its Registered Office at 10th Floor, Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai - 400025.
Motilal Oswal Asset Management Company Ltd. has been appointed as the Investment Manager to Motilal Oswal Mutual Fund by the Trustee vide Investment Management Agreement (IMA) dated May 21, 2009, executed between Motilal Oswal Trustee Company Ltd. and Motilal Oswal Asset Management Company Ltd.

Do you save or invest? Can you identify the difference?

Do you save or invest? The two of them have different levels of benefits and at the same time have different requirements. It is crucial to understand the need for investment or saving. Often interchanged in term usage, the two mean completely different things. Find out how the two terms are different from each other and which one is more beneficial.

Saving over Investing

The first type of person on the graph believes in saving more than investing. He has a short term goals and therefore is looking for short term profits. He allocates only a small amount to investments and focuses more on savings. Interest on saving accounts is often lower. Saving gives you access to ready cash when you need it as one can liquidate it in a short span of time. Saving has a lower return than investments. Saving allows for an easy access to the money and therefore the person may withdraw a part of his savings or the whole amount as per his wishes. This can prove to be unbeneficial as he can end up spending more money, since he has quick access to his savings. However, before deciding to invest or save, he needs to be clear if his approach is short term or long term. Is he looking for expenses and emergencies? Then savings is a good option. But it isn’t a smart plan for long term goals. It is like putting his money into a piggy bank, it won’t double but it will still be at a risk of being used immediately. 

Investing over Saving

The second type of person focuses largely on investing. He understands and believes that investment will give him long term benefits and therefore allots more towards investment and lesser to savings. Investing wisely may give returns higher than savings in the long run. This technique also ensures a higher growth potential than regular saving methods. He has a better understanding of the likely growth and this helps him yield larger benefits over the period of time. The investor knows that investments involve risks but with proper research and right direction from experts it can be prevented.  While planning for the future, he realizes the limited income resource and the changing needs, along with inflation; hence he invests first and saves after. Thus, making savings a part of his investment plan and not the other way. It is just like waiting for your treatment to completely heal you from a cold rather than stopping your medication midway

Do you save more or do you invest?

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Disclaimer:The information herein alone is not sufficient and should not be used for the development or implementation of an investment strategy and shall not constitute as an investment advice. MOAMC shall not be liable for any direct or indirect loss arising from the use of any information contained in this document. Readers shall be fully responsible for any decision taken on the basis of this document. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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