Consider the following points which differentiate savings from investments:

1. Your financial goals drive the decision of saving or investment

Let's understand this with an example. If you want to purchase a mobile in the next five months & the cost of the mobile is ₹ 30,000, you can save ₹6,000 per month & buy a mobile at the end of the 5th month.

If your goal is to own a car & the cost of the vehicle is ₹15,00,000, you will need to invest the money so that it can give you an appreciated value of at least ₹15,00,000.

2. Time frame:

The savings meet short-term financial goals, whereas investments are made to meet a long-term financial goal.

3. ROI (Return on investments):

The savings accounts give returns of 2%-3%, fixed deposits offer returns of 4%-6%, & the rate of return on investment in the share market extends 9% -10% CAGR.

4. Risk involved:

Risk & reward go hand in hand. Where the returns are high, the risk involved is high.

The risk involved in the savings bank account or fixed deposits is almost nil as the returns involved are also the minimum. On the other hand, the risk involved in a stock market or mutual fund investment is higher as the returns or reward is relatively high compared to savings or FD accounts.