[transcribed 2021-06-02]

**Discuss the relationship between saving and investing. Analyze the risks and
benefits in saving with a bank or savings and loans as opposed to investment
savings.**

Saving money with a bank is effectively just relying on the interest of a place
you store money to get you more money. It *always* works. After you’ve
deposited money, you’ll eventually have more money when you decide to withdraw.

The trouble with savings accounts is that they aren’t very *fast.* It’s rare to
get an interest rate more than 2-3%, which makes generating money slow – often
too slow.

An investment is placing money somewhere in the hopes that you’ll get value out
of it. Loans are a common type of investment. You are given money, and are
expected to return that money (usually more than the amount you took) at the
end of a period of time. You have to rely on having that money available by the
time the loan is over and you need to pay, but you can use the money you got
from the loan to get that money.

A college student may set up a loan with their school so that they can
effectively get a job. Once they need to pay off their loan, they’d hopefully
have the money they need to do so.

And that’s the risk of investments and loans. You have no guarantee you’ll be
able to gain value from an investment, or even be able to safely deal with the
investment when the time comes.

The obvious solution is to avoid making bad investments, but the fact is it’s
very, very difficult to accurately decide what’s an investment absolutely worth
making. They’re often somewhat random.

Investments will always come with risks. So perhaps a good idea is to balance
your investments with savings? In the case that an investment doesn’t turn out
well, or another source of income disappears, you’ll need money to stay secure.
Hopefully, this money can come from a good backup source. This may well be a
savings account, that has been slowly accumulating money over the past (from
both deposits and interest).