Saving vs Investing

Dimenips asked in the previous post what our asset allocation strategy is. Before getting into the details of how we split out monthly income between IRAs, stocks, and mutual funds, I think it is important to describe our view of investing and saving. So here it is...
At a first glance saving and investing can seem like the same thing. It is important to understand the difference but utlimately it is left up to you to decide. For us, we consider saving to be the act of tucking money away for a rainy day. Some examples of ways for saving are CDs, savings accounts (held with ING or traditional commercial banks), or even burying cash in your backyard. Saving is not as risky as investing and therefore there isn't much of an additional reward other than having some money set aside for future use/emergencies. IRAs(Individual Retirement Account) are really nothing more than savings accounts. Why you ask? Let me explain my take on investing and hopefully it will become clear...
Investing is taking capital and putting it to work for you. An example of investing is owning something that generates cashflow. Rental real estate, partnerships, stakes in businesses are examples of things that can generate cashflow. Any stock or mutual fund that pays out dividends are also examples of investments, but these are a stretch because dividends are not guaranteed.
What about stocks that don't pay dividends? A lot of people would say that buying and selling stocks is investing. I agree with Robert Kiyosaki's concept that this is actually gambling. When you buy a growth stock you are betting that the price of the stock when you sell it is going to be higher than when you bought it. There are certain things you can do to minimize your gamble but ultimately no one knows for sure what tomorrow's market will bring.
Back to the IRAs... by our investing definition IRAs are not really generating cashflow. At some point in the future we will be able to withdraw from our IRAs but that $$$ isn't really being put to work. It's growing over time, hopefully faster than a savings account, but at some point the IRA will be depleted. An investment however, like a rental property, will continue to generate cash indefinitely.
I will write some more tomorrow about our overall investment/saving allocation and strategy. But at a high level we've dabbled in a number of these areas.

Mikey