What is saving?
Savings is money you keep and do not spend. You can keep it in a piggy bank or a bank account. Saving a small amount regularly adds up to a big amount over time, and it helps you buy something you really want later or be ready for an emergency.
Worked example
Ali saves RM20 each month. After 6 months he has:
RM20 × 6 = RM120.
What is investment and interest?
A bank may pay you interest for keeping money there. If you save RM200 for one year at 5% interest, the interest is 5% of RM200 = RM10, so you have RM210. An investment is putting money into something (like a business or shares) hoping it grows into more money. Unlike simple saving, an investment is not always safe, so we should learn about it first and never put in money we cannot afford to lose.
Key idea
Savings are safe and grow slowly. Investments can grow more, but their value can also go down. That is the risk.
Remember
- Pay yourself first: save before you spend.
- Interest makes savings grow.
- Investment can grow or lose value.