Now, while the two practices can be very closely related, they are not the same, and understanding the differences between saving and investing can make a big difference in your financial future. In most cases, it is advisable to pursue both savings and investments, but each is suited to very different needs.
As a general rule, savings (international or otherwise) is a short term solution to financial needs. There are a wide variety of savings accounts available, depending on your method of banking, and you should research all of these account types thoroughly before deciding which one is best for you. Many international banks offer individual savings accounts. Many expats and international businesses choose to maintain their savings in countries where the currency is highly valued, making conversion of saved funds worth more at withdrawal. These kinds of accounts allow you to tuck away funds in whatever amount desired for withdrawal at a later date. These can be ideal for emergency situations such as injury, job loss or the need for unexpected travel.
If you tend to be very conservative with your money, savings accounts can be very beneficial, as they are considered one of the safest ways to maintain money. Savings accounts are typically very low risk, but also offer little potential to increase your money without direct contributions. While savings accounts will accrue interest over time, it may take months and even years to see a significant increase of your balance based on interest alone.
Investing your money offers a greater potential for gain, but also an increased risk of loss. The types of investments available are even more widely varied than savings accounts. Some of the most common investment types include stocks (investment in a corporation), government or corporate bonds and certain kinds of savings accounts. The risk involved in investing money is that your financial success is dependent upon the success of the institution holding your funds (e.g. the company or the government).
Investments are typically considered more appropriate for long-term gain, and many investments can only be withdrawn after they mature without penalty. Withdrawal of invested funds is also considered income, and is subject to taxation based on your jurisdiction (whereas savings are not subject to additional taxation). While investment is considered riskier, it can ultimately be very rewarding if approached with level-headedness and the willingness to accept potential loss. Investment should be handled wisely, and can benefit from the employment of a highly qualified, well-reputed advisor. International investing is an excellent way to take advantage of opportunities in markets outside of your domestic jurisdiction, especially if the economy of another country is showing exceptional growth and security.
Everyone handles their money differently, and you should consider both your long and short-term financial needs when deciding to save or invest. Many advisors will encourage that you try both in varying degrees to best accommodate all of your needs.
More Expat Resources
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