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Why Are Savings and Investing Important?

Savings and Investments are important because they help in providing money for when you need it. Savings help you keep your money and Investing allows you the possibility to make more money to get the things you want or need.


Savings

A few tips on savings would be to set or create a budget in which you allow yourself to only use a specific amount of money within a certain time period, this provides a more efficient way to saving your money while still having some laid back for emergencies; another tip would be to consider your retirement fund, what will you live on, finish your education and get a career to begin saving in that fund so your will have money after your retirement. A couple savings options are: Social Security, Company Retirement Plan, and Personal Savings.


Investment

Investment can be pretty risky, especially if you don't know what your doing.

A few tips on beginning to do investments is to start easy, to begin star with creating put-and-takeout- account which is most commonly a checking account. Once you comfortable with your checking account and it is relatively stable you can then begin on investing but start out slow and don't continue until you are sure it is stable. With all investments there is a risk (the possibility to get or not to get your money back), return (The amount of money returned to you with or without interest), and liquidity (the ability in which something can be turned/ traded in for cash).

Investment Types:


  1. Savings Account- Has a low risk with a return of 0.001%. The liquidity is high in this investment type but there is hardly any interest put into your money when returned.
  2. Checking Account- Has a low risk with a return of 1%. The liquidity is high in this investment type but the interest percentage is not very high.
  3. Certificate of Deposits (CD's)- Has a low risk rate with a return of 2.3%. The liquidity is low to medium in this investment type.
  4. Savings Bonds- Has a low risk rate with a return of 0.7-3.5%. The liquidity is low in this investment which could be a problem.
  5. Stock- Has a medium risk rate with a return of 11%, which is pretty good. The liquidity level is medium in this investment type.
  6. Real Estate- Has a medium to high risk rate with a return of 10-20%, which is pretty high although the liquidity of this investment type is very low.
  7. Art- Has a high risk rate with a very high return rate, depending on the art piece you invest in; for example if you choose to invest a widely and well known piece of art then the return might be higher than that of a piece of art bought on the street that is not known at all. The same rule applies with the liquidity in this investment type it all revolves around the piece of art.
  8. Collectibles- Has a high risk rate with a return from low to high; collectible investments are a lot like art investments, its liquidity and return percentage all depends on the collectible and whether or not there is a person there to buy it. The liquidity is low in this investment type.
  9. Precious Metals- Has a high risk rate with a return rate from medium to high. The liquidity level is from low to medium; as stated in both the art investments and collectible investments, a precious metals investments liquidity and return rate depends on whether or not there is a buyer and on how valuable that metal really is; there is always a case in which you have to sell your product for much less that its worth.