What do you prefer, saving or investing?

Originally answered Aug 20, 2019

You need to do both.

Save:

1. In interest-paying checking, savings, and money market accounts and in money market mutual funds
2. Money that you can’t afford to lose
3. Funds that you may need in the short term
4. To establish an emergency fund
5. Through regular deposits
6. Through direct deposits of pay checks
7. Through automatic monthly transfers from checking to savings
8. Through spending responsibly
9. Through minimizing and avoiding expenses
10. By being a wise consumer; if you save 20% on the normal price of a needed purchase, this is like getting 20% tax-free interest on savings

Invest:

1. In no-load mutual funds, Exchange Traded Funds (ETFs), and real-estate portfolios
2. Money that you can afford to lose
3. Funds that you won’t need in the short term
4. For major purchases such as the down payment on a home
5. For retirement
6. For medical and nursing home expenses
7. To create an estate for your heirs
8. Through one-time purchases
9. Through automatic monthly investments
10. Through retirement plans such as 401K, 403B, and IRAs

See:

• What are some effective ways to reduce your personal spending?
• What are the best ways to invest money?
• What personal finance mistakes should everyone avoid?