Invest or Save in 2020?

The coronavirus pandemic caused widespread global disruption. Some people lost their jobs, businesses collapsed, many plans and dreams were halted. Amid uncertainties and anxiety, we all worry about financial security. Which begs the question: Should you invest or save? Should you invest in stocks and equities, or stash your cash safely in a savings account? I hate to say it depends, but it really depends. The answer depends on your goals and definitely your current financial situation. Before deciding what to do, knowing the difference is crucial in making your choice.

Difference between Investing and Saving

Definition Investing means to invest a portion of your money through different investment vehicles such as stocks, UITF, mutual funds, or bonds to increase its value. Choosing investments depend on your risk tolerance, investment objective, and investment knowledge. Saving is setting aside your money over some time for emergencies or future use. Money is usually put somewhere easily accessible like a savings account.
Purpose Ultimately, you invest to grow your money. The main purpose of saving is to have some money to use for planned or unplanned situations.
Examples There is a multitude of investment options depending on your financial objective and investment know-how. You can invest in:

  • Stock market
  • Securities
  • Real estate
  • Insurance, etc.
Saving money in this digital age means you have a plethora of ways to do it. 

  • Download a budget app
  • Automate savings
  • Open an interest yielding savings account like time deposits. 
  • Or stick to tradition and stash your disposable income in a good old envelope. (just make sure to lock it in a safe)
Time Horizon Long (3 years or more) Short (except time deposits)
Difficulty Easy to Hard Easy
Risk Moderate to High (There is always a risk of losing money with investing) Low or negligible (Savings do not have any risk of losing money)
Return Medium to High Low
Liquidity Less Liquid Very Liquid

Now that we know the difference between investing and saving, let’s take a look at some tips on how either (or both) can work for you.

The Best Way to Approach Investing

Investing during a pandemic can be scary, but it doesn’t mean you can’t do it. While it’s normal to feel panic and worry about losing money, keep in mind that the crisis won’t last forever. Assess your financial situation. If you lost your job, investing money might be the last thing on your mind. If you already have current investments and have enough emergency savings, try to be patient. Keep as much of your money in the market as possible so you can reap the rewards when the market recovers and rises again. Another way is to be defensive, sell some of the losers in your portfolio. Better to sell the stocks that are doing the worst to protect yourself from severe potential losses.

For more tips, read: How to Invest in a Volatile Market

If you’re just thinking about starting an investment, strategize wisely. If you’re younger, focus on growing your money. Know that taking advantage of super low-priced stocks isn’t your only option. You can also invest in real estate and look at foreclosed properties. House prices in manila are high, but the Airbnb option for some investment recovery is also not available. Who knows, you may stumble upon a gem at a very low price! On the other hand, if you’re older and closer to retirement, focus on protecting your wealth. Diversify your portfolio, opt for less volatile funds and be more careful with (or avoid) high-risk investments.

Read More: Why Property Is the Best Investment You Can Make Right Now

While it’s easier said than done, you should accept the fact that investing in a crisis involves high-risk, but it can also get you high rewards when done right. Timing is key. You can either wait to invest when the market tanks or spread out your investments across a schedule. As long as you do your homework – assess yourself, your finances and make rational rather than panic-driven decisions, you should be fine.

The Best Way to Approach Saving

During a crisis, there is no doubt that your priority should be to shore up and save for your emergency fund. This will give you a safety net and can help you get back on your feet faster post-crisis. A good emergency fund should cover six months of day-to-day expenses – food, shelter, utilities, and transportation. Anything outside that can wait. This might also mean prioritizing cash savings over investments, at least temporarily if that’s what your finances tell you.

Read More: How to Start and Build Up an Emergency Fund

First, take a look at what you have and check if you have enough cash. Then ask yourself if your funds are enough to cover your family’s basic needs or even potential unemployment. Next is to do what you can to save more money each month. The quickest way to save more money is of course by cutting back on your spending. Now is the perfect time to practice living within your means. If you don’t have a savings account yet, now is the best time to open one.

Here’s how to open a savings account online: How to Open an Account via Skype Video Call

Once you’ve opened a savings account, schedule and automate your savings. The key to meeting your savings goal is dedication. Automating or scheduling your transfers is the best way to do it. You may also consider taking on additional income-generating activities – sell something or do consultancy online. This has become a trend since the pandemic started and can give your funds an extra boost. Of course, those extra funds should be put into your savings account. Another way to generate income with your savings is to open a time deposit account. That is if you have enough cash to spare and stash away for some time. Time deposits earn higher interest than a regular savings account but offer less risk than most investments. In a way, you hit 2 birds with one stone – you save and invest.

Read More on Time Deposits: How to Protect Your Savings (Even From Yourself)

Lastly, never turn to credit when you know your income is not enough to pay it back. Using credit as a last resort is a mistake that often haunts us back. Getting a loan can be a smart move as long as you use it wisely and you have the means to pay it back. You will need a larger income to repay the money and interest of what you borrowed during the tough times. With or without a crisis, saving money should be part of anybody’s to-do list. It’s practical, responsible, and is sure to benefit you especially when the going gets tough.


Managing your finances during uncertain times often boils down to knowing what to prioritize. Neither saving nor investing is better in these circumstances, and the right choice really depends on your current financial position. You can save first if you don’t have an emergency fund yet or invest if you feel confident you can make it through the crisis with your liquid savings. You can mix saving and investing, too. And if you think about it, investing is just one kind of saving. Whenever you put money aside, you’re saving. When you put money aside with the hopes that it will somehow provide a bonus, you’re investing. But in general, you’ll want to keep this logic in mind:

  • For short-term goals, save. If you need the money by a certain date, for a specific purpose, save rather than invest. Example: If you know you need money for your child’s tuition next year but decided to invest that money with the hopes of growing it, that’s not investing that’s gambling. With saving, there is no risk of your balance decreasing.
  • For long-term goals, invest. Investing is delayed gratification. It may give you greater returns if you invest long term and allows you to delay your goal if things don’t go smoothly – like a pandemic.



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