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Frequently Asked Questions

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Business investments

What is the difference between saving and investing?

Saving generally refers to putting money in an interest-bearing account such as a savings account, checking account or certificate of deposit administered by a bank and insured against failure of the banking institution by the Federal Deposit Insurance Corp. (FDIC) up to the maximum allowed by law.

Investing, unlike saving, can entail significant risk. When you invest, you risk the potential loss of some or all of your money. Investors hope to generate higher returns on invested dollars than on savings account deposits because they are taking a greater risk with their investment money. This is the concept behind the tradeoff between risk and potential reward. Higher-risk investments have greater potential to pay higher returns, but they are also more likely to result in losses.

How do I understand risks, rewards and investment planning?
What is diversification?
How do taxes affect my rate of return?