Personal
finance
Within personal finance, money used
to purchase shares, put in a collective investment scheme or
used to buy any asset where there is an element of capital risk is
deemed an investment. Saving within personal finance refers
to money put aside, normally on a regular basis. This distinction is
important as investment risk can cause a capital loss when an
investment is realised, unlike saving(s) where the more limited risk
is cash devaluing due to inflation.
In many instances the term saving
and investment are used interchangeably which confuses this
distinction. For example many deposit accounts are labeled as
investment accounts by banks for marketing purposes. To help
establish whether an asset is saving(s) or an investment you should
consider where your money is invested. If the answer is cash
then it is savings, if it is a type of asset which can fluctuate in
value then it is investment.
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