Confused About Choosing Savings or Investment? Here's How to Decide

JAKARTA, KOMPAS.com — When someone has freed themselves from debt and has surplus income after meeting primary needs, the next step often raises the question: where should that money be allocated?

Amid the growing variety of financial instruments, determining the right type of savings or investment is not always straightforward.

Moreover, each individual’s financial needs differ, from buying a house, preparing for a child’s birth, continuing education, to fulfilling lifestyle requirements.

“Generally, you must think about your goals and break them down into categories based on time frames,” said Todd, quoted from CNBC, Thursday (16/4/2026).

“From there, you can determine the best way to allocate your cash,” he added.

Founder of The Financial Gym, Shannon McLay, emphasises that financial planning should start with understanding life goals.

According to him, every goal has different cost implications and requires distinct storage or investment strategies.

Even expenditures often considered small or unimportant, such as keeping a pet, still need to be factored into planning.

In other words, financial decisions are not just about choosing financial products, but also about understanding future life needs.

In this position, individuals are seen to have more flexibility to begin building wealth.

After that, fund allocation can be divided into various “baskets” according to goals and time frames.

For needs that will occur in the near future, around zero to two years, Todd suggests keeping the funds in low-risk and easily accessible instruments, such as savings accounts.

Instruments like high-interest savings accounts are preferable because they are relatively safe and not affected by market fluctuations. Although the returns are not large, stability is the main advantage.

With this approach, fund owners do not need to worry about market movements or the risk of losing investment value when the funds are needed soon.

For goals with a time frame of three to five years, the strategy begins to change. Funds can start to be invested in the market, but with a more conservative approach.