Saving and investing: the basics of financial literacy for young people

It is important for young people to understand the differences between saving and investing so that they can make informed financial decisions. Savings are money set aside for a rainy day. They should be kept in a safe place, such as a bank or safe deposit box. These funds are intended to cover unexpected expenses or large purchases and usually remain stable in value due to low returns.

While saving is aimed at building up a stockpile for emergencies, investing is focused on capital growth and generating income. This may include buying stocks, real estate, or other assets to increase funds for financial ambitions such as homeownership or education. Despite the potential risks associated with fluctuations in market values, a diverse investment portfolio can reduce these risks. Young people need to recognize that savings support their short-term financial security, while investments support long-term life goals.