Pros and Cons of Saving vs. Investing - Genisys® Credit Union

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Pros and Cons of Saving vs. Investing

on 8/10/2022

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One of the most popular questions people ask is whether they should save their money or invest it. The simple answer: both. While investing your money traditionally earns more than a savings account, there are some risks and downsides.

Before you jump straight into risk-based investments, it’s essential to understand the pros and cons of both options.

Advantages of Saving

There are several savings options available to members at Genisys. These include savings accounts, money market accounts, and certificate accounts. While each option is slightly different, they all share vital advantages.

  • Less Risk. Unlike risk-based investments, such as the stock market, your savings at the credit union will only grow. 

  • Easier Access. Should you need immediate access to your money, you can quickly withdraw it from your accounts. Your money is not tied up or subjected to holds as it can be with investments. Certificate accounts even allow you to withdraw before the term date, however you may be charged a slight penalization fee depending on the institution. 

Disadvantages of Saving

While savings offer safe and consistent returns, there are downsides when compared to other investment opportunities.

  • Earn Less. The most significant drawback of saving is that the returns are typically lower when compared with other risk-based investments. While some investors may be more comfortable with greater risk in exchange for potentially higher returns, conservative investors may opt for lower returns with little to no risk.

  • Easier Access. While quick access to your money is an advantage, it can also become a disadvantage. With easier access, there’s a greater temptation to dip into your savings for frivolous spending.

Advantages of Investing

When it comes to investing your money, the largest draw is the potential to earn higher returns. However, it’s important to remember that investing, especially for retirement, is a long-term strategy and must be treated as such. 

  • Better Returns. Market-based investments usually offer greater yields when compared to traditional savings accounts. However, there is also the potential for loss, so it’s highly suggested you work with a financial advisor to limit your exposure to market fluctuations.

  • Long-Term Strategy. Investing is more of a long-term approach to growing your money. With your money well-diversified within the market, you’re typically better positioned to handle economic fluctuations and inflation. There are also a variety of tax-advantaged accounts available to help you grow your money.

Disadvantages of Investing

The greatest drawback of investing is risk. Whether you’re investing in the stock market, real estate, or newer options, such as cryptocurrency, your risk exposure is much higher when compared to saving your money.

  • Greater Risk. While the potential to earn more draws most investors, the ability to lose money keeps many savers away. The market is prone to short-term fluctuations and corrections that can cause you to lose money. By working with an experienced financial advisor and focusing on the long-term, you can effectively plan to limit your loss exposure.

  • Not Liquid. When your money is invested, it may be harder to access your money if necessary. While a savings account provides quick access, your invested funds may require days to withdraw. If the market is down, pulling out your money may result in additional unforeseen losses.

Saving AND Investing: A Healthy Balance

Everyone wants to grow their money. Start by building your emergency fund. Once you have three to six months of living expenses saved in your savings account, switch your focus to investments.

We’re Here to Help!

When it comes to growing your money, there are many options available. Whether you’re interested in opening a savings account or speaking to a financial advisor, our team is ready to help. Please stop by any of our convenient branch locations to learn which savings and investing options are right for you.


© Genisys Credit Union and, 2022. Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited.  Excerpts and links may be used, provided that full and clear credit is given to Genisys Credit Union and with appropriate and specific direction to the original content.


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