Saving Isn’t Investing, How That Mistake Is Costing Indians More Than They Realise

In homes across India, hard-earned money is being quietly lost. Not stolen, but lost due to the confusion between saving and investing. Though many people use the term interchangeably, they are completely different.

What is Saving

Let say, someone, tucks away Rs 1,000 per month for five years (60 months) in a cupboard. He/she is saving for sure, but from an investing purpose, it's a negative return. Of course, he/would have collected a sum of Rs 60,000 at the end of five years, but taking inflation into account, it would be a negative return. That's because while the money is safe, it hasn't grown.

How Investing is Different From Saving

In contrast, if the same anount were to be invested, say, through a systematic investment plan (SIP) in a mutual fund, then assuming a conservative 12 per cent return annually, the corpus would have grown to a little over Rs 82,000 over the same five-year period. Even a recurring deposit at 7 per cent would push it to around Rs 72,000. 

That's how investing is different from saving.

What’s sobering is that the effort doesn’t change. Just the instrument.

The real danger lies in the comfort of tradition. For decades, saving has been viewed as a virtue, a sign of responsibility. But saving without growth is a passive act. It locks money into stillness, while inflation continues to erode its value.

How Saving is Eating Away Your Corpus

Many Indians still lean heavily on bank deposits, fixed deposits (FDs), or worse, idle cash. These instruments may offer psychological safety, but financially, they are stagnant. After taxes and inflation, the real returns are often in the negative.

The tools for investing are now more accessible than before. Digital platforms allow users to start investing in equity or mutual funds with a few taps.

Part of the problem lies in the lack of basic financial education, as a result of which many equate any form of investment with gambling, or worse, outright loss. But responsible investing helps in outpacing inflation, compounding returns, and letting time work in your favor.

Saving is good for creating an emergency fund or for short-term expenses or liquidity. But when it comes to building wealth, beating inflation, and planning for retirement, savings alone won't help. What is required is proper investing.