How can investing help you reap the benefits?

You can get ahead financially by building a portfolio that includes quality investments.

It is easy to confuse saving with investing. Both can be used in conjunction, but they do not work the same way.

Investing is not just about building savings for rainy days

Practically, saving is putting money aside for the future. It is also known as "forgone consumption" by economists. It's essentially tipping your money into a savings account, so you don't spend all of it.

Savings are a smart way to start investing. It provides you with the funds that you need for a wide range of assets. But investing offers three key benefits that will help you reach your goals.

Potential for long-term, healthy returns

While saving money means you save some money for tomorrow, investing is about putting your money to use to earn a higher return over the long term. Different investment types—fixed interest and cash, as well as property and shares—can produce different levels of return, depending on how risky the investment is.

These are the historical returns for the past 30 years. As you can see . . .

Shares and property have historically been the most resilient asset class, with higher peaks as well as lower troughs. An investor can earn capital growth over a longer period as well as ongoing income (like dividends from stocks or rent from a house).

While "defensive assets" such as fixed income or cash may not have provided the same level of return over time, these returns are less volatile and have smaller peaks and troughs.

Beat inflation

Inflation is an increase in the cost of living over time. This can have a significant impact on our financial health.

It is possible to reduce inflation and earn positive long-term returns by investing in assets with higher income returns.

Additional income

It's possible to make extra income by investing in quality investments

Your investment return could be used to generate regular extra income for your daily living. Or, you may choose to reinvest your money to grow or compound your wealth.

Savings are vital. Investments can offer more than just a "rainy-day" fund, depending on your tolerance for risk.