What is the difference between saving money and investing it?

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

Investing, unlike saving, involves some risk and does not have FDIC insurance coverage. With investing, there is the potential for loss of some or all of your money. Investors seek to generate higher returns on invested dollars than on savings account deposits by taking a greater risk with their investment money. Higher-risk investments offer greater potential to pay higher returns, but they also increase the possibility of losses.