Saving Vs. Investing: What Are The Differences In Singapore?


Saving and investing are two widely used financial terms often interchanged by many people. However, these are two completely different concepts with their own unique set of benefits and risks. In a nutshell, saving is the money put aside for short-term goals, while investing involves allocating money to grow wealth in the long run.

In Singapore, saving and investing are highly encouraged as the country boasts a stable and thriving economy. This article will explore the differences between saving and investing in Singapore, highlighting key aspects. By the end of this article, you’ll have a better understanding of which option suits your financial goals better.


The primary difference between saving and investing lies in their purposes. Savings are typically used to achieve short-term financial goals, such as purchasing a new car, vacationing, or building an emergency fund. These goals are achievable within a few months or years, and the money saved is easily accessible when needed.

On the other hand, investing is done in the long term to create wealth and achieve financial stability in the future. It involves putting money into different investment vehicles, such as stocks, bonds, real estate, etc., to generate higher returns over a more extended period.

In Singapore, most people have both short-term and long-term financial goals. Therefore, it is essential to understand the purpose of saving and investing to make informed decisions. For example, if you plan to buy a car in the next two years, saving would be the best option as it allows for easy access to funds when needed. But suppose you want to save up for retirement or your children’s education; investing would be more beneficial as it offers higher returns over a more extended period.


Another crucial difference between saving and investing is the level of risk involved. Savings, such as a regular savings account or fixed deposit, are considered low-risk options. The money invested is typically protected up to a certain amount by the Singapore Deposit Insurance Corporation (SDIC). On the other hand, investments carry higher risks due to market fluctuations, which can result in capital loss.

However, with higher risk comes the potential for higher returns. Singaporeans have access to various investment opportunities with different risk levels. For conservative investors who prefer lower-risk options, government bonds or blue-chip stocks may be suitable. In contrast, those seeking higher returns can opt for riskier investments such as unit trusts or exchange-traded funds (ETFs).

One popular investment vehicle in Singapore is the Saxo regular savings plan. It allows investors to contribute regularly to a diversified portfolio of low-cost ETFs, providing long-term growth potential while minimising risk.


When it comes to liquidity, saving and investing have significant differences. Savings typically offer high liquidity, meaning the money can be easily accessed whenever needed. In contrast, investments are considered less liquid as they involve locking up funds for extended periods.

For example, if you have an emergency and need immediate access to cash, your savings account would be the best option, as you can withdraw the money anytime. However, if you have invested in stocks or real estate, it may take some time to liquidate the assets and get the cash you need.

Hence, it is crucial to have a balance between savings and investments. While investing has a higher potential for growth, having enough savings helps to cover any unexpected expenses that may arise.

Return on Investment (ROI)

One of the main reasons people choose to invest is to generate higher returns on their money. In contrast, savings offer lower returns but are relatively safe. Saving accounts in Singapore provide an annual interest rate of around 0.05%, while investments can generate double-digit returns.

For example, investing in the stock market has historically shown an average annual return of around 8-10%, while property investments can generate rental income and capital appreciation. However, it is essential to note that higher returns come with higher risks, and past performance does not guarantee future results.

Tax implications

Another significant difference between saving and investing is the tax treatment. In Singapore, the interest earned on savings accounts and fixed deposits is generally not taxable, making it a tax-efficient option. On the other hand, most investments are subject to some form of taxation, such as dividends or capital gains tax.

However, there are also tax benefits for investments in Singapore. For example, individuals can enjoy tax deductions by contributing to their Supplementary Retirement Scheme (SRS) account, which can be used for retirement planning. Some investments, such as the Singapore Savings Bonds (SSBs), are exempt from taxes on interest earned.

It is crucial to consider the tax implications when making financial decisions, as it can significantly impact your overall returns. You should seek the advice of a financial advisor or tax specialist to ensure you make the most tax-efficient decisions.

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