What is the difference between saving and investing?

Investing and saving are two words you often hear used together, and sometimes, even interchangeably.

Take a closer look at the definition of saving vs investing:

• Saving is the act of setting aside money you would rather not spend now for possible use in the future. A savings account, for example, allows you to access this money at any time without any risk or loss. People often start saving money for a variety of reasons, like vacation trips, medical emergencies, big purchases, and tuition, to name a few.

• Investing is the act of buying assets, like stocks, mutual funds, bonds, property or real estate, and other kinds of investment tools with an outlook that their value will grow your money. Provided that there are risks involved, these investment vehicles are often used to achieve long-term goals, such as retirement, college funding, or purchasing a property.

Although the two have different meanings, they can have the same goal and purpose. There are certain investment products, such as UITFs, that are meant to support your short-term, medium-term, and long-term financial goals.

While both are necessary to ensure you’re financially secured, saving is the first step to investing. After all, you do not invest to save money. You save so you can invest and grow your money.

Don’t hesitate to contact Metrobank to know how to open a Metrobank Savings Account today, so you can do so much more and go forward in life, knowing your hard-earned money is protected.

Build an emergency fund before investing

Often dependent on your financial goals and tolerance for risk, the best time to start investing is when you have repaid any existing loans, effectively clearing yourself of debt. Saving up for an emergency fund prior to making any significant investments allows you the opportunity to maintain good financial standing in the event your investments fail to yield favorable returns.

Say your monthly expenses amount to around PHP 35,000, and you’re making approximately PHP 50,000 per month. Your goal is to start investing after a year, but you don’t have an emergency fund yet.

A workable target for a short-term emergency fund is six months’ worth of your monthly expenses. And given these sample figures, this means having an emergency savings target of PHP 210,000 in a year, which translates to a savings of PHP 17,500 per month. However, with your monthly income less expenses, building your emergency fund is not feasible unless you make adjustments to your monthly expenses, extend your timeline, or tap additional revenue streams.

While keeping your money in a savings account ensures less to no amount of risk, the return on annual interest can be considerably less than the growth a successful investment earns in the market.

Your financial journey starts on Earnest

When you’re ready to invest, you can you can use the Earnest app to:

• Discover your risk profile and the investment funds that are recommended for you
• Invest easily in Metrobank’s Unit Investment Trust Funds (UITFs)
• And even open an Earnest digital deposit account that you can use as your settlement account

Your Earnest digital deposit account gives you:

• Zero minimum balance, no initial deposit, and no maintaining balance required
• Enjoy up to 1.0625% interest per annum
• Higher interest rates as opposed to a regular savings account

All of this without having to set foot in a Metrobank branch.

You can also link your Earnest digital account to your Metrobank Online account so you can access Metrobank’s online banking services. Allow Metrobank to secure your savings and build your future with various investing opportunities.

Download the Earnest app now on Google Play or the App Store to start investing.