Saving and Investing

by: Bethany Churchill

Why are they important?

It is very important to save and invest your money. Why is this true? This is true because if you save your money then you will have some if you need it. For example, you want to buy a new outfit for a special event that is coming up. You could use the money that you have saved to buy it. Investing is important because you can make more money than you have already. Instead of having your money just sitting around earning you $0.05 a year, you can invest in something and make more than $0.05 a year.

Tips to Help You Save

One thing you can do to help you save money is to put it into a savings account. If you do this then it will be safe and give you some interest (0.001%). One way you could do this is to take some out of your paycheck every month and put it in your savings account. Another thing you can do to save money is to put it into a checking account. With this your money is safe, you can get to it at any time, and you get an interest of .003%.

Tips to Help You Invest

There are many possible things to invest in with many different details to consider. One thing you should take into account as you decide what to invest in, is if it is a good decision for you. If you are about to retire and have the money for it, investing is a bad idea because of the risk of losing your money. For example: you are 70 years old and finally ready to leave the working world for peace and quiet. You have $120,000 saved up from your younger days. Should you suddenly buy up a bunch of stock? Probably not because you have what you need. Another thing that is important about investing is to start when you are young. The reason for this is so you can make the most money. If you lose it in buying stocks or investing in something else, you have time to earn that money back. What can I invest in? You could invest in many different things like art, government bonds, or a savings account but everything comes with risk. Art for example, has a high risk because people may not like this art. The return (or money you get back) of this art can be very high if people like it, but the liquidity is low because it may be awhile before and if this artist gets famous. The main things to take into account when deciding you what to invest in something is the risk, return, and liquidity. The risk is the chance of you losing money and if there is a high risk then you may not want to chose that because you could lose everything you put into that investment. Return is the money you can get back from this investment, the higher the risk the higher the return. The third thing to think about is liquidity. What does that mean? This is how easy it is to get to your money. If you have a checking account you have a high liquidity because it is easy to get to that money. If you have a government bond then it has a lower liquidity because you have to wait to use that money.