Question

What is the main difference between investing and saving?

Answer 1

Answer:

B.) Investing has the risk of losing principal, whereas saving does not.

Step-by-step explanation:

Saving can be accomplished a number of ways, including putting the money in a cookie jar (where it will not earn interest). Most savings institutions (banks, credit unions, and the like) are governed by rules that help to ensure the availability and safety of the balance. Often, such institutions are insured so that depositors are protected against loss of principal.

Many investment opportunities are governed by no such rules. The invested amount may be unavailable for perhaps a lengthy period of time, and any return on the investment may be dependent upon factors not under the control of the party accepting the money. There is the opportunity for complete loss of the invested amount, and the possibility of incurring additional liability in some cases.

Investment in certificates that are traded on a regulated exchange will be subject to the exchange rules, generally including the requirement that the investor be fully informed of the risks. That doesn't mean there is no risk—it just means the investor is supposed to be made aware of it.