Learning Investments

by Chris Lavy

The Pros and Cons of a Savings Account

-Pros

  • When you give money to a Bank to put into your Savings Account you earn interest on that money.
  • The Bank will loan out the money to people who need it, if it's a company, the money could be used to open a new work place, or expand the current one. This could allow them to hire more people, and they will pay other companies for the materials and construction.
  • Low Risk.
  • It is a very Liquid asset.
  • Can buy C.D.'s and increase the amount of interest earned from your money.

-Cons


  • Don't earn as much money.
  • Will have to pay a fine if you withdraw the money in your C.D. before the allotted time is up.


The Pros and Cons of Investing

-Pros

  • Can earn more money than what you would with a Savings Account.
  • Is a Liquid asset.
  • Helps businesses become more succesful.

-Cons


  • Higher risk.
  • Can lose all of the money you have invested.


Savings Tips

  • Take all the money you are not using or don't need to use and put it in a Bank Account.
  • When you put more money in there, buy C.D.'s to increase your interest earned.

Two savings options

  • If your company has a 401k option you should definitely use it. A 401k is where part of your check is automatically taken out and put into a retirement investment account. This is money you will be able to use when you retire.
  • Set a Budget up and put all the money not used into your savings account.

Investment Tips

  • When you are younger it is better for you to get involved with riskier types of Investments, because you still have the majority of your life ahead of you, so it will be easy to make the money back.
  • Before you involve yourself with any type of investment, learn about them.

FDIC-Insured Savings

  • These are savings accounts
  • Very Liquid
  • Can buy C.D.'s to increase the amount of interest earned annually on your money.
  • Low Risk
  • Not very Profitable

Government/Municipal Bonds

  • A Bond is basically an IOU that pays interest over an allotted period of time.
  • This is the safest kind of bond
  • Not a very Liquid asset
  • Municipal Bonds are issued by State and local governments
  • These are a bit riskier than Government Bonds
  • Slightly More Liquid

Corporate Bonds

  • These Bonds are a lot riskier
  • Have a higher return
  • Just as Liquid as other Bonds
  • Can lose some or all of your investment

Stocks

  • The riskiest type of investment
  • Higher possible return
  • Can lose all money invested.
  • Very Liquid

Happy Investing!!!