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  • Mr Money TV

Should You Save, Invest or Do Both With Your Money? (2024)

Updated: May 24

Navigating the realm of personal finance can often feel like charting unknown waters. One of the most fundamental questions many individuals grapple with is:

Should I save, invest, or do both with my money?

In this article, let's explore the advantages and considerations associated with each approach to help you make an informed decision.

Should You Save, Invest or Do Both With Your Money?
A Comprehensive Guide: Should You Save, Invest or Do Both With Your Money?

Saving: The Traditional Safety Net

The first lesson we learnt as a kid from our parents has always been to “save your money!” And that notion still rings true today - saving is an important aspect of personal finance.

It provides liquidity, stability and is the most predictable asset you can own.

Savings, especially when kept in accessible accounts, can be readily used for immediate expenses or emergencies. Other than that, funds saved in banks are usually insured up to a certain limit, providing security against loss. Unlike investments, savings usually provide a fixed return, albeit a small one.

However, when you’re only saving your money in savings accounts, the interest rates often don't keep pace with inflation, which means the real value of your money might diminish over time. You are also missing out on opportunity cost as money that’s saved and not invested misses out on potentially higher returns from investments.

Investing: The Path to Potential Growth

Most of us start hearing talks about investing when we’re in college or when we start working. We’ll hear things like “make your money work for you” and although it’s cliche, it is possible to make your money work for you - and you should!

By investing, you’re reaping in potential higher returns, taking advantage of compound growth as well as spreading your wealth across various assets other than cash.

Investments, when chosen wisely, can offer returns significantly higher than traditional savings accounts. Then with your earnings, it can be reinvested, leading to compound growth and potentially accelerating wealth creation. Investing is also not as scary as it seems as there are diverse options to choose from including stocks and bonds to real estate and mutual funds. All you have to do is research and find an investment option that suits your risk appetite.

With that being said, it’ll be ignorant to say that investing is easy. It comes with risks and the possibility of losing some or all of your invested amount. Investing also requires a certain level of knowledge, and while resources are abundant, it can still be daunting for beginners. Last but not least, some investments may not be as easily liquidated as savings, which can be a concern if funds are needed on short notice.

A Balanced Approach: Save, Invest Or Both?

For many people, a combination of saving and investing proves the most beneficial.

I’m sure you’ve heard of the "50/30/20 rule" – allocate 50% of income to necessities, 30% to lifestyle choices, and 20% to savings.

I want to challenge this rule and tweak it to include investments. I call it the “50/20/10/20 rule” - 50% necessities, 20% lifestyle, 10% savings, and 20% investments.

Here's why I think every Malaysian should use the 50/20/10/20 rule and take a balanced approach to saving and investing:

1. Immediate Safety Net

A savings buffer can provide peace of mind without touching investments. For instance, the "6-months rule," suggests saving an amount equivalent to six months of expenses for emergencies. This can ensure you don't have to liquidate investments in a rush and miss out on compounding growth.

2. Long-Term Growth

Investing a portion of your money can ensure that you’re not only preserving but also growing your wealth. Fortunately in Malaysia, we have EPF. While it's primarily a savings tool, EPF invests portions of the pooled funds, making members like you and me indirect investors as well.

3. Flexibility

A balanced approach offers flexibility. You can adjust the ratio of savings to investments based on life stages, goals, and financial needs. For example, a fresh graduate might focus more on saving, but as one climbs the career ladder, the balance can shift towards investments.


Whether to save, invest, or adopt a balanced approach depends on individual circumstances, financial goals, risk tolerance, and time horizons. For many, a mix of saving for short-term needs and investing for long-term growth is a strategy that offers both security and the potential for increased wealth.

What we need to understand is that it isn't a matter of choosing one over the other but rather understanding their individual and complementary strengths. By harmonizing traditional wisdom with modern financial strategies, Malaysians can pave the way to holistic financial health. And as always, continuous learning is your best ally on the journey to financial well-being.

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