Understanding Choices for Your Money
Saving and investing are not synonymous, despite the fact that the terms are frequently used interchangeably. Understanding the distinction can help you achieve your financial goals. In the end, a combination of the two may be the best option.
“When you save, you may want to consider a low-risk place to put your money with convenient access. Depending on your choice, you might earn interest or you might not. ”
Three simple tips to decide where your money belongs
1. Define your goals
When you save, your main goal is to keep your money safe while without losing any of its value. Savings can be useful for an emergency fund, a short-term goal, or any other type of requirement if you need to access the cash immediately.
When you invest, you are giving your assets the opportunity to expand over time. You should be willing to take on more risk with your investing money than you would with your savings. With the possibility to grow your money comes the danger that the value of your account will fall. If you have several years before you need the money for a goal, such as your child's college tuition or your retirement, you may have time to recover from drops in the market.
2. Find the best place to save
When you save, you may want to consider a low-risk place to put your money with convenient access. Depending on your choice, you might earn interest or you might not. Possible options can include keeping the funds in your checking account, savings account, or certificate of deposit (CD).
3. Explore investment options
When you invest, you are purchasing an asset that you anticipate will appreciate in value. Because the value may fluctuate, consider investing money that you won't need in the near future, allowing time and compounding to work in your favour. You may wish to be able to sell when market conditions are favourable, rather than when they are not. Working with a Financial Advisor or becoming a self-directed investor are two ways to get started investing.
Getting started with investing is easy. If you learn about the basic types of investments and find the right Stock Advisor, you can begin making more informed financial choices for the future.