ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If you have a defined contribution pension (most pension savers do), then your monthly contributions are paid into a fund that invests in the stock market. This fund usually achieves growth over the long term, but in the short-to-mid term its value can fluctuate wildly due to ‘booms and busts’.

Detailed explanation-2: -Saving means setting aside cash for future use. Investing means using cash to buy other assets that you expect to produce profits or income. Those other assets are commonly stocks, bonds, mutual funds, and exchange-traded funds (ETFs). Real estate, cryptocurrency, and collectors’ items are also investable assets.

Detailed explanation-3: -Saving is definitely safer than investing, though it will likely not result in the most wealth accumulated over the long run. Here are just a few of the benefits that investing your cash comes with: Investing products such as stocks can have much higher returns than savings accounts and CDs.

Detailed explanation-4: -Saving and investing are both important components of a healthy financial plan. Saving provides a safety net and a way to achieve short-term goals, while investing has the potential for higher long-term returns and can help achieve long-term financial goals. However, investing also comes with the risk of losing money.