What's the difference between 'saving' and 'investing'?

Cape Talk's John Maytham, in for Lester Kiewit, speaks to Chrisley Botha, a financial advisor at PSG Wealth.

Listen below:

July is National Savings Month in South Africa, reminding everyone about the importance of putting money aside for the future.

Botha says many people use the terms 'saving' and 'investing' interchangeably, but they're quite different.

She says saving is usually short-term and low-risk: think emergency fund or saving for a holiday. That's money that stays safe but doesn't really grow. 

"And investing, on the other hand, is about growing your money over time, which involves more risk, but it also gives you the best chance to beat inflation and builds real wealth, especially for long-term goals like retirement."

- Chrisley Botha, financial advisor - PSG Wealth

A recent survey by FNB showed that 40% of South Africans say they intend to start saving for retirement but they haven't yet. 

"They often say it's due to the cost of living and also about the uncertainty of where to start."

- Chrisley Botha, financial advisor - PSG Wealth

"If you start saving at age 25, so that's around about when you start earning your first salary... then you only need to start saving 15% of your income. If you delay that and you only start saving at 35... your savings portion doubles up to 30%. If you start saving at 45, you will need to start saving 60% of your income. And at 55 you will need to start saving 120% of your income. That all means you can retire at age 65 in a comfortable state so you can maintain the same standard of living."

- Chrisley Botha, financial advisor - PSG Wealth

The longer you delay the harder it gets.

"Compound interest is your friend and time is your friend," Botha says.

Scroll up to the audio player to listen to the full interview.