Saving For, or Investing In Your Retirement: Know The Difference

Investing for retirement is a crucial step in securing a comfortable future for oneself. However, not all methods of saving for retirement are created equal. In this blog post, we will discuss the difference between an investor who is saving for the long-term and a saver who simply hoards money in a bank account with low interest rates.

An investor is someone who actively puts their money into various financial assets such as stocks, bonds, mutual funds, and real estate. The goal of an investor is to grow their money over time through capital appreciation and/or income from dividends or interest. An investor typically has a long-term perspective and is willing to take on some level of risk in order to achieve higher returns.

On the other hand, a saver is someone who simply saves their money in a bank account or other low-risk savings vehicle. The main goal of a saver is to preserve their capital and earn a low level of interest. Savers typically have a short-term perspective and are not willing to take on much risk in order to achieve higher returns.

The difference between an investor and a saver is quite simple: an investor is looking for growth and is willing to take on some level of risk in order to achieve it, while a saver is looking for preservation and is not willing to take on much risk.

The problem with being a saver is that the interest earned on bank accounts is often very low, and inflation can erode the value of the savings over time. For example, the average interest rate on a savings account in Canada is around 0.5%, while the average Canadian balanced fund has historically returned around 7%. This means that the saver's money will not grow at a fast enough rate to achieve their retirement goals.

On the other hand, an investor who is saving for retirement can achieve much higher returns through the stock market and other investments. This means that the investor's money will grow at a faster rate and they will be able to reach their retirement goals much sooner. Go check out our post on "The Rule of 72" and calculate how long it will take your money to double, then...

Contact FS2 today and let us help you become an investor and achieve your financial goals.