Indonesian Lantern May-June 2014/2nd Edition | Page 20

Indonesian Lantern Magazine − 20

Indonesian Lantern Magazine− 21

EcONOMy

Saving is Good...

But It's Not Investing
by Edward Jones

I

t’s a good thing to have some

your objectives.

money in a low-risk account,

To illustrate the difference be-

Ultimately, the question isn’t

between the amounts accumu-

savings. When you put the

This enormous disparity

whether you should save or invest

lated in the two accounts clearly

— you need to do both. But you

you can be pretty sure it will be

tween saving and investing, let’s do shows the difference between

do need to decide how much of

readily available when you need

a quick comparison. Suppose you

your financial resources to devote

it. Nonetheless, “saving” is not

put $200 per month into a savings you might be thinking that in-

toward savings and how much

“investing” — and knowing the

account that paid hypothetical 3%

vesting is risky, while savings ac-

toward investments. By pay-

difference could pay off for you far interest (which is actually higher

counts carry much less risk. And

ing close attention to your cash

into the future.

than the rates typically being

it is certainly true that investing

flow, you should be able to get a

Think about it this way: Saving is

paid today). After 30 years, you

does involve risks — investments

good idea of the best savings and

for today, while investing is for

would have accumulated about

can lose value, and there’s no

investment mix for your particular

“saving” and “investing.” Still,

tomorrow.

situation. For example, if you find
yourself constantly dipping into

You need your savings to pay

your long-term investments to

for your daily expenses, such as

pay for short-term needs, you

groceries, and your monthly bills

probably don’t have enough mon-

— mortgage, utilities, and so on.

ey in savings. On the other hand, if

In fact, you might even want your

you consistently find yourself with

savings to include an emergency

large sums in your savings account

fund containing six to 12 months’

even after you’ve paid all your

worth of living expenses to pay for

bills, you might be “sitting” on too

unexpected costs, such as a new

much cash — which means you

furnace or a major car repair.

should consider moving some of
$106,000, assuming you were

guarantee that losses will be

this money into investments with

These are all “here and