The first, savings, is more about keeping or maintaining money over a period of time – so that it’s kept for specific, planned purposes, and not spent unnecessarily. Savings can be short-term (say, saving for a year-end holiday), medium-term (e.g. saving for a deposit on a house in a few years) or long-term (e.g. saving for your newborn’s university education) in nature. 
 

The second term, investments, though, is much more aimed at ensuring that you grow your money over time. Here, the focus is generally on building up wealth for retirement, or to live off of at some point in the future.
 

Whether you’re looking at savings or investments, the first thing you want to ensure is that you’re making a real return on your money. What this means is that you’re earning interest, or experiencing growth, at a rate higher than inflation. If you’re earning less than inflation, you’re effectively losing money, as it’s becoming worth less and less each year, in terms of what it can buy. With inflation rates currently hovering around the 6% mark, you’ll want to be earning above that to ensure real growth of your funds.
 

Savings are generally the realm of bank accounts and the equivalent. With your existing bank, ask them what savings options they have, over and above a standard savings account. All commercial banks will offer money market accounts or notice deposit accounts, which will generally earn you more than a standard savings account. They will often have a minimum amount required to access them, which then gives you the opportunity to earn a higher interest rate. With notice deposit accounts in particular, your money would be ‘locked in’ for 7/30/90 days (or whatever the term may be). In return for the predictability of knowing that you won’t be withdrawing your money, the bank compensates you by paying you a significantly improved rate of interest.
 

Another option for savings over the medium- to long-term is bonds. These are pre-structured investments from companies, municipalities or the government, which will contractually pay you out interest at a specific rate (called the ‘coupon rate’) for a specified period. A very common type of bond in the marketplace are the RSA Retail Savings Bonds, which are currently offering returns in the 7-9% range, making them solid, above-inflation stores of wealth.
 

With investments, there are then two other asset classes to take into account, over and above cash (as in, cash or bank savings) and bonds. These would be property, and equities (also known as shares). While the pros and cons of investing in property is outside the scope of this article, if managed well, with sound investment criteria, property can form a good wealth-building aspect of your investment portfolio.
 

Equities, or shares, are then investments in operating companies. In effect, by buying a share in a company, you become a part-owner of that company, and there are two ways to receive an income or growth from that investment. The first is if the price of the share increases – you can sell it for more than you bought it for, and make a gain. The second is if you hold onto the share, and the company makes a profit and distributes a dividend to shareholders. Equities offer the best opportunity for substantial growth in the investment landscape, but paired with that, they are also the riskiest, in that you can also lose money with equities (whereas it’s relatively guaranteed that you won’t lose money with bank savings or bonds). Equities should thus be approached with caution, and in consultation with experienced advisors, making sure to take into account your investment goals, timelines, and attitudes towards risk.