What is the difference between a pension and savings fund?

[Heatman]

Everything about saving money is vastly different from any kind of investment that you are going to get into because whatever you save stays that way but whatever you invest to keep on multiplying for you.

 

[BrolySSJ]

Everything about saving money is vastly different from any kind of investment that you are going to get into because whatever you save stays that way but whatever you invest to keep on multiplying for you.

It is a very good point and Investments generally come with a very good interest rate that you are able to grow the principal amount however I think that many people are not ready to take this risk and as a result they choose to rather go for a savings account.

 

[Heatman]

It is a very good point and Investments generally come with a very good interest rate that you are able to grow the principal amount however I think that many people are not ready to take this risk and as a result they choose to rather go for a savings account.

Exactly, without the Returns that comes with investment then it's basically the same thing as savings because the money would just be there without providing anything for you in return for what it's being used for.

 

[Filicit]

A pension is usually an agreement between an employer and employee to offset a particular amount for retirement purposes while savings is putting money aside.

 

[btaliat]

The only thing I know that is common to both is that they both have the same aim. They are being kept for the future use or when the person is old.

 

[BrolySSJ]

Exactly, without the Returns that comes with investment then it's basically the same thing as savings because the money would just be there without providing anything for you in return for what it's being used for.

Yes, and people think that with the investments that you make with banks that it is completely safe, however the risk is still there with a bank it is just lower than some of the other investments that you may make with companies and online.

 

[Setho]

When you are keeping money in a savings fund it mean that you're keeping it for use on a later date but pension means you are keeping it for use after retirement.

 

[kayode10]

Both of them are quite the same but their duration is different a bit. Pension scheme requires you to continue paying is different out of your salary to you get to retirement. You can decide to cash out your saving fund.

 

[BrolySSJ]

Both of them are quite the same but their duration is different a bit. Pension scheme requires you to continue paying is different out of your salary to you get to retirement. You can decide to cash out your saving fund.

I think that a savings account actually gives you a bit more freedom when it comes to the management of your money and in this way perhaps a lot of people would opt for this if pension funds were not mandatory.

 

[Heatman]

Yes, and people think that with the investments that you make with banks that it is completely safe, however the risk is still there with a bank it is just lower than some of the other investments that you may make with companies and online.

Yeah - it's actually true that when you have your investment with your bank it's actually safe but the rate of return of the investment to gain from it is very low.

 

[BrolySSJ]

Yeah - it's actually true that when you have your investment with your bank it's actually safe but the rate of return of the investment to gain from it is very low.

I think that is why people tend to try to go to other methods of investment and starting their own business with their money because that is way more likely to have a positive effect than a small investment in a bank.

 

[Kunkun]

Well although both are similar in a way that money is being kept aside for future use, but the idea behind pension is actually different from just savings but at the end of the day the end for both are similar

 

[BrolySSJ]

Well although both are similar in a way that money is being kept aside for future use, but the idea behind pension is actually different from just savings but at the end of the day the end for both are similar

The nature of them is very similar however I think the way that they are implemented is where the key difference is lies because you are unable to have access to your pension fund as readily as you would a savings fund.

 

[Setho]

When you open a pension fund when you are saving the money solely with the intention of using it after your retirement and not just in the near future.

 

[BrolySSJ]

When you open a pension fund when you are saving the money solely with the intention of using it after your retirement and not just in the near future.

This is also a very important criteria that is prominent when it comes to pension funds because you are only able to access them after you have officially taken your retirement package from the company in question.

 

[jeff87]

When you create a pension fund this is essentially money that will be put away and be paid out to you upon your retirement in order to fund your lifestyle at that time. It ensures that you have enough money even after you retire to continue to meet your financial needs. However, this sounds very similar to a savings account that you have had for a long term in my opinion. In a savings account you can put or deposit a certain portion of your funds monthly and save them for later on, when you so need them, or at your retirement.

What are the differences between a pension fund and a savings account, because they seem to serve the same purpose and have the same mechanisms driving it.

I think pension fund is from your company that you are working with. I think part of your salary from the company is being set aside and paid to the social security system.

 

[BrolySSJ]

I think pension fund is from your company that you are working with. I think part of your salary from the company is being set aside and paid to the social security system.

This is generally the case and it is taken out of your salary and put into a pension fund before you are paid out so it is a necessary deduction. Just like how tax would be taken out as well.

 

[Heatman]

I think that is why people tend to try to go to other methods of investment and starting their own business with their money because that is way more likely to have a positive effect than a small investment in a bank.

The major challenges that most people who wish to start up their own business faces is lack of the required capital needed for them to start up the business successfully.

 

[Shigobad2020]

Pensions is for a longer period of time than investment plans. Generally, the earliest you can take benefits from a personal pension is aged 60. Therefore, they are usually unsuitable as shorter term savings plans.

You are quite right with your opinion about investment and saving fund, pension involve a longer period of time starting from when you start work till you actually retired.

 

[Heatman]

If you can actually be saving your pension money that's paid to you, it automatically becomes a saving fund which makes them have a link between each other.