"Saving" is for the short-term (any cash which shall be used in the next 0-5 years). This will be held in no to low risk assets.

"Investing" is a long-term assignment of capital to assets which will be more risky, but provide better returns in a time period of over 5-8 years (depending on investments).

Many "savings" will turn into investments (such as the purchase of real-estate) but until it is assigned to the longer-term assets, it should be referred to and managed as savings.

When you talk about nvestment then you have a greater chance of losing your money than when you save. Unlike FDIC-insured deposits, the money you invest in securities, mutual funds, and other similar investments is not federally insured.

"I personally will never invest where I can't have my principal guaranteed." 

Care to explain your reasoning?

Thank you for pointing it out. The Richest Man in Babylon is my inspiration for this belief.

For example, hard money lenders have their principal guaranteed by a collateral. If something goes wrong, the hard money lender can get his principal back.

Now, I may have over-stated. I think it is reasonable to have a riskier part of your portfolio where you are willing to lose in exchange for bigger gains (for example investing in start-up businesses) but that money is not my retirement money.

I still think that the best way to get rich is not to lose money.  

Hi everyone! This is my very first post here and I would like your insights.

There seems to be a lot of confusion regarding savings and investing.

For example, most people save their retirement money in investment products such as mutual funds.

And we know that the Stock Market looks more like a SixFlags amusement park than a safe haven.

What is the purpose of Saving?

What is the purpose of Investing?

Where do you draw the line between those 2?

Renaud,

Saving and investing are 2 separate actions. In your example, people do not "save" their retirement money in investment products such as mutual funds. People earn wages and use these wages to consume. If they choose to delay consumption, they are "saving." Savings is the difference between what is earned and what is spent. 

Just as you can work for money, money can also work for you - this is "investing." Rather than buying consumable goods and services (we'll call them liabilities), you can buy assets. Stocks, bonds, real estate, previous metals, etc. There are a number of different places you can invest, but the intent is for your money to multiply. If you buy real estate, this happens through rent payments and appreciation of the property. If you buy stocks, this happens through dividends and appreciation. 

So, to answer your question - there is a clear line between the two. One (saving) typically leads to the other (investing). If you save, but do not invest then your money will erode thanks to inflation (I know you understand inflation because I looked at your blog). This leads me to a question for you:

"I personally will never invest where I can't have my principal guaranteed." 

Care to explain your reasoning?

There seems to be a lot of confusion regarding savings and investing.

For example, most people save their retirement money in investment products such as mutual funds.

And we know that the Stock Market looks more like a SixFlags amusement park than a safe haven.

What is the purpose of Saving?

What is the purpose of Investing?

Where do you draw the line between those 2?