My Advice on Saving and Investing
By: Katelyn Owen
The Importance of Saving and Investing
Savings are important because:
- It can help cover unexpected financial events
- Help for a down payment on a house
- Save for a vacation
- For future emergency events
Investing is important because:
- Either way your money ends up being invested
- Inflation decreases the buying power of your money if it's in a savings account
- You get the profits when you personally invest your money
- Helps with long term goals
Tips on Saving
If your putting your money into a savings account for the short-term goals in your life, here are some tips:
- First off there are two options; Check-able deposits and savings deposits.
- A check-able deposit is the amount of money you put into a checking account. They are highly liquid and can quickly be converted into cash. It however, earns little to no interest.
- A savings deposit is money deposited into a savings account. It earns more interest than check-able deposits even though their return is still low. They are only slightly less liquid than check-able deposits. Easy withdraw.
Tips on Investing
If you plan on investing your money to earn some profits and have money for your long-term goals, here are some tips:
- It both offers rewards and poses risks
- By investing your money, you can double your money or you can lose it. Just depends on what you go for.
- Compounding is a great advantage of investing. Compounding is the ability to generate earnings and reinvesting for those earnings to gain even more.
- You can invest in stocks and bonds but always, always, always weight the rewards versus the risk before you commit.
- The stocks and bonds have some liquidity but its not exactly high. It's about medium. Most have a time duration that you have to follow.