Heath Grossman here with Money Wisdom Question Series. Today’s question is, “Is it better to invest money or save it in the bank?”

Long-Term Investment Growth

As with a lot of our questions, the answer is: it depends. It ultimately depends on the time frame for when you want to use this money and the purpose of this money. What are you saving for? Many people choose to invest their money if they are investing for long-term retirement goals. If you’re a younger person and retirement is 30 or 40 years away, you have a long time, right? So, you can invest your money in the stock market or other types of instruments that are designed for long-term growth. Even if you are 10, 15, or 20 years away from retirement, that can make sense to a certain degree.

Short-Term Financial Goals

Now, maybe your goal is different and you’re saving to purchase something very soon. Let’s say you want to buy a home and you want to be able to put down a down payment and your goal is to do this in two years. Well, that’s an instance where the time frame of that goal is a little bit shorter term. Maybe for that goal, what you are probably going to be doing is gathering that money and saving that money in the bank. You want to make sure that in two years’ time when your goal comes around, that money is ultimately there for you and it’s not lost to a market decline.

So again, your decision to either save your money in the bank or invest it in a long-term investment is going to be tied to what the goal is for that money and what the time frame is for that goal.

Thanks for joining me and I hope you found this information helpful!