Investing is sexy.  It represents a chance to put your money on the fast track to growth. It’s the way people make fortunes.  We like to think about investing, looking for high-yield strategies, exploring “systems” and pursuing every possible “edge” we can.

Saving is boring. It involves little more than hiding some extra cash into an FDIC-insured mattress.  It’s handy for rainy days and unanticipated expenses, but it won’t make you rich.  We don’t spend a great deal of time thinking about savings.

We might want to change our thinking a little bit.

According to a Putnam Investments study quoted by Walter Updegrave from Money/CNN, “[S]aving is just as important [as investment] for building wealth, if not more so. We can’t be sure of the size of the investment gains we’ll earn, and we don’t have nearly as much control over them as we used to think. But we have much more control over how much we save.”

Saving has a great deal of power and it’s something we shouldn’t overlook.  Increasing savings decreases the need for aggressive investment, which reduces the risk of substantial setbacks.  If you don’t have a nest egg, you need to invest more aggressively in order to meet your long-term financial goals.  Those aggressive investments, naturally, bring with them a higher risk than more conservative alternatives.

Additionally, a nice pile of saved cash is a fantastic cushion against hard falls in the market.  Who is suffering more right now, in light of the market meltdown, the person who was completely “in the market” or the person who balanced that kind of investment against substantial savings?  The answer is obvious.

Those might seem like “common sense” observations, but they actually contradict the most popular outlook on the savings vs. investment argument.  Many experts believe in a “three year rule”.  They argue that it makes sense to save your money if you think you will need it to meet an expense within three years.  Otherwise, they argue, the money should be invested.  The Investment FAQ sums up that perspective in “Subject: Financial Planning - Saving versus Investing”.

The same logic underlying the “three year rule” is flushed out by Financial Web.  They argue that shorter-term anticipated expenditures justify savings but that wealth creation is primarily a matter of investing.

Updegrave seems to be taking notice of something that others often overlook.  Savings isn’t merely a means of reaching shorter-term goals, it actually has an impact on long-range financial well-being, too.

If you’ve been avoiding saving because it seems to have such limited potential compared to investment strategies, you might want to consider the interplay between the two a little more closely.  Smart savings can serve as a launching pad for a lower-risk investment approach that may actually provide better long-term returns than if you sunk your cash completely in the market.

American Century Investments and others, however, will be quick to remind us that we need to evaluate our savings options carefully.  By their very nature, savings returns tend to be low and it’s possible to actually lose money while saving due to a combination of inflation and taxes.

The bottom line: Saving has a role in your personal financial plan.  Savings provide liquid cash for meeting unanticipated expenses.  Saving is the best way to meet substantial shorter-term needs.  Socking your cash away can also hedge against poor investment performance while simultaneously providing a solid foundation that will allow you to pursue a less risky overall investment strategy while still meeting your long-term goals.

Investment is still undoubtedly the sexier option, but it doesn’t make sense to ignore the potential real value of savings.