As Robert Kiyosaki, the author of Rich Dad, Poor Dad, once said, “It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”

Going by this, deciding whether you should save the money- or invest is an extremely important decision, and it depends on what your goals are — do you want to buy a car? Invest in a home? Travel the world in a year?

Here’s how you can decide what to do with your money; ask yourself these questions!

1. How much do you owe already?

If you have current debts or commitments, it is important to maintain 6 months of liquidity before you consider investment proposals, in case of hardships such as the loss of a job. Once this is achieved, it’s best to let your money do some talking.

Depending on how much debt you are already in, saving or investing can be quite beneficial to you if you do it right. A general rule of thumb is to invest in Low-risk Liquid funds when you need money in the near future (the next 1–2 years) and invest in top funds when you think you’ll only need it later.

2. Why are Savings not sufficient?

Savings and investment aren’t the same. Saving Accounts will keep your cash liquid but give you very poor returns because of the low risk you are taking while investing will give you a lot more money back because you’ve taken more risk by investing in stocks or bonds. Moreover, savings products (FD, RD, Savings accounts) do not beat inflation so they leave you poorer, contrary to many other investment options where the returns are higher.

3. How much to save and how much to invest?

Save enough so all your immediate spending are covered — food, water, electricity, any other small payments you need to make — and this means you should save enough for at least 6 months of your life. Keep some money aside for your social life such as travelling, eating out and other forms of entertainment without overdoing it.

Invest what you have left, or save up some money just to invest at a time when you think you have a higher appetite for risk.

4. Is Investing Risky?

Generally, the more you invest in equities, the more risk you tend to take. However, the higher the risk, the higher the chance of getting great returns as well. Debt funds are relatively safer and Liquid funds are almost as safe as Fixed deposits.

Though there is no guarantee, there is a definite potential for high returns, compared to what is received when you just save. On a long-term basis, products like mutual funds are proven options to beat inflation and meet your aspirations.

Next time you’re wondering which is right for you, use this cheat sheet, ask yourself if you can afford the risk or not (i.e. whether you have time on your side or not), and save or invest for a rainy day!