Extra money should follow a clear order: pay off high-interest debt first, then build an emergency fund covering a few months of expenses. Once both are covered, split what remains between a savings account for short-term goals, backed by deposit insurance, and investments, including P2P lending, for a longer horizon where capital is at risk.
What to Do With Extra Money — Saving vs. Investing in 2026
Should I Save or Invest My Extra Money First?
When the investor is deciding whether to invest the money or put it in the savings account, it is necessary to consider whether the money would be needed if some severe economic shock were to occur or some essential expenses were to be required. If the investor already has an established emergency fund and extra funds are not necessary for covering essential living expenses or protecting the financial situation, the investor can try investing. On the contrary, if the investor needs to establish an emergency fund in case of a shock or change of the financial circumstances, it is better to put some money in a savings account.
It is entirely plausible for the investor to have separate pools of funds for saving and investing. This way, the investor may attribute some proportion of the free funds to savings while simultaneously buying P2P claims to continue investment.
Should I Save or Invest Extra Money?
It is advisable to save extra money if the investor thinks that the need for the emergency fund is a plausible short-term scenario. Likewise, if the investor believes that the current emergency fund covers enough, it may be more beneficial to invest. The answer depends on the investor’s personal perception of risk and the likelihood of the future events that may affect the portfolio in the short and the long run.
How Much Should I Keep in an Emergency Fund First?
There is no universally “correct” sum that a person should keep in their emergency fund. The amount depends on factors like existing financial obligations like loans, the situation with medical insurance that may or may not require a pool of funds to pay for some expensive treatment, and other factors. The person’s income may also influence how much money they will need in an emergency fund. Since the employment situation may differ, it is also important to understand that monthly household expenses and personal needs may vary too, leading to different pools of funds in an emergency fund.
Saving vs Investing: What’s the Real Difference?
In principle, saving is the process when the investor puts the money in the account that is secured, with the purpose of preserving capital and retaining the access to it immediately or after a short notice. Investing means the purchase of the assets or claims with the goal of growing capital and accruing additional funds through interest or other mechanisms. The difference between saving and investing is summarized in the table below.
| Dimension | Saving | Investing |
|---|---|---|
| Purpose | In the short term, the main goal is to preserve purchasing power or to have an emergency fund | Long-term accrued capital accumulation and investment returns |
| Time horizon | From a few months to 1-2 years | Typically lasting for several years or longer |
| Capital protection | Deposits can be protected by deposit insurance | Capital is at risk. The investment is not protected by deposit insurance |
| Expected return | Generally low, often close or slightly above the inflation rate | Potentially higher, returns may practically vary and are not guaranteed |
| Volatility and risk of loss | Usually minimal if the funds are kept within the insured limits | Moderate to high because of the class of the asset with the risk of partial or complete capital loss |
| Liquidity | Usually high, funds available immediate or after a short notice | Greatly varies by investment. For P2P, early liquidity is strictly limited by the Secondary Market |
| Effort | Low, typically opening and maintaining a savings account | Higher since it requires KYC, due diligence, and portfolio monitoring, with the investor actively participating in the process |
| Tax note | Interest may be taxable depending on the jurisdiction | Investment income is typically taxable in many jurisdictions. The platform usually does not withhold taxes |
The table is illustrative. Protection, taxation, access conditions, and investment risks vary by product and jurisdiction.
When Should Extra Money Stay in a Savings Account?
A savings account helps to secure the funds and increase liquidity and access to the money. That is why, if stability is the primary goal of using extra money, a savings account is a better option than investment. Savings may help with debt repayment for the mortgage, upcoming tax obligations fulfillment, travel, tuition and medical fees, and other expenses. Savings may also matter if the person remains unsure about future employment; for example, if the current employment contract ends in a couple of months and the person is not sure whether it will be renewed, it may be useful to put some money aside, depositing it in the savings account.
Investments are primarily suitable for capital growth. Yet, it comes with an important trade-off, with investment being less likely to be recovered in the short term. Even a diversified portfolio may encounter severe constraints if a recession happens or multiple assets in it devalue because of the borrower’s default or temporary financial hurdles. That is why it is more difficult for the investment to recover in the short term.
What Is the Best Thing to Do With Extra Money?
There is no universal answer about the “best thing” to do with extra money. If the investor’s primary concern is stability, a savings account may be a better option. If capital growth remains an important part of the strategy, then investment can probably be a better use case. Each option comes with a trade-off, with money put on the savings account typically offering lower returns because of higher liquidity, while investing carries more risk.
When Does It Make Sense to Start Investing Extra Money?
Investing extra money is a better option provided the initial financial obligations like rental payments, loan payments, and regular expenses are already covered, or there is no risk that the investor would fall short of money to cover them. This is where investment may bring more benefits since some assets in a portfolio will generate more interest while those who may have been curbed by negative outcomes may grow back in value.
The investor should understand that every investment carries a degree of risk. P2P investment offers higher returns and provides regular interest payments but comes with limited liquidity through the Secondary Market, borrower default risk. Property investment requires planning and the acceptance that the price of the asset can fluctuate. Likewise, stocks of the company do not eliminate the risk of insolvency.
P2P lending is the type of investment that allows the investor to provide a private loan to the business seeking growth or money for operational expenses. Maclear allows the investors to finance the businesses by purchasing individual claims that are debt-based instead of shares of the company that give the right of ownership. Maclear is a member of PolyReg SRO and works under its framework in the Swiss jurisdictions.
Is P2P Lending a Good Place for Extra Money?
P2P lending may be a good place for extra money provided that all the initial expenses are covered or the investor has reasonable grounds to assume that nothing will put them at risk of not being able to pay for the basic regular expenses. Since P2P investment carries borrower-related and liquidity risks, if the investor does not have an emergency fund or struggles to pay the rent or the tuition, then P2P investment may not be an optimal choice.
How to Build a Simple Saving-vs-Investing Framework
If there is a need to build the framework that would incorporate both savings and investing at the same time, the consideration of time horizon is one of the practical steps. Money necessary for short-term expenses or for an emergency fund is better in a savings account to make it available immediately. Money that can be used in the long run to bring additional revenue, either in interest or other returns, may be better off when invested.
Another issue is loss tolerance since a savings account is mostly for preserving capital, while investing can create additional capital but comes with a trade-off that capital losses may be higher. Likewise, if the credit risk and perceived revenue from the investment are not worth the attempt, it may be better to preserve capital in a safer savings account.
Liquidity of the funds is another concern. Typically, investments (including P2P claims) offer varying liquidity that can be lower than the funds on the savings account. Investment capital is not protected by deposit insurance and remains at risk. That is why, if the investor wants to maintain higher liquidity, it is better to use a savings account.
Diversification of the assets influences the risk profile of an investment portfolio. Industries, returns, and regions of investment projects affect interest rates, credit risk scores, and other things. That is why putting a large pool of funds into one asset may involve a higher risk.
FAQ
Should I save or invest extra money?
It is advisable to first secure the emergency fund and make sure that the basic regular expenses are covered. After that, investing can be considered to allocate the rest of the funds to generate more income and grow capital.
How much extra money should I keep in cash?
It is advisable to keep the pool of money enough to cover several months of basic expenses in cash. This way, the investor reduces the probability of sudden borrowing or the need for additional financing or income sources. The rest may be allocated into an investment portfolio if the investor wants to do it.
Should I pay off debt before saving or investing extra money?
Yes, generally, it is reasonable to pay off any debt before saving or investing extra money. The value of debt is higher than the expected returns from both savings and investing. That is why both scenarios are better off in a debt-free situation.
What is the lowest-risk way to grow extra money?
The lowest-risk way to grow extra money is through savings with deposit insurance. Yet, this comes with an important caveat — as it is a low-risk investment with high liquidity, the returns may be moderate, and, if the goal is the potential to grow capital faster, savings may not be an ideal choice.
Is P2P lending a good option for extra money?
P2P lending may be a good option for extra money if the investor has some pool of funds available in the long term they want to attribute to capital growth with the potential of higher returns. P2P investment is not risk-free, and that is why the investor should consider covering basic expenses before considering it.
About Maclear
Maclear AG is a Swiss-based P2P lending and crowdlending platform headquartered in Switzerland. The company operates as a financial intermediary in the non-banking sector and is a member of PolyReg SRO, in compliance with Swiss financial regulations including AML, KYC, and GDPR. Maclear offers retail and qualified investors access to vetted business loan opportunities, with built-in risk assessment, a Provision Fund, and a Secondary Market for liquidity.
The content of this article is provided for informational and educational purposes only. It does not constitute investment, financial, tax, or legal advice. P2P lending and crowdlending investments carry a risk of partial or total capital loss. Past performance is not indicative of future results. Liquidity on a secondary market is not guaranteed. Readers should conduct independent research and consult qualified advisors before making any financial decisions. Availability of products and services may be restricted in certain jurisdictions.