Tips for Svings and Investing
Mutual funds are an easy and affordable way to invest your money in a diversified pool under professional management.
If you want your investments to track the general economy, you can buy shares of an index fund whose value tracks a broad average such as the S&P 500
Bonds offer a set rate of return—unless and until the issuer defaults. You can buy low-risk bonds with a low rate of return, or high-risk bonds with a high rate of return. If you opt for the latter, do your research on the issuer first!
Who issues bonds?
Businesses and all levels of government issue bonds.
Investing in stocks, bonds, and funds is easy and affordable using an online brokerage firm.
If you want to avoid all risk but make some return on your capital, you can buy bonds issued by the U.S. Treasury. Their rate of return will often barely keep pace with inflation.
Start saving and investing young to take advantage of the awesome power of compound interest.
When to start
Once you've built up adequate savings for a rainy day or special purchases, you should consider investing.
If you keep far more money in a savings account than you could ever need on short notice, you are missing out on the time value of your money, and your money is losing value to inflation. Invest it!
If there's little chance that you will need to liquidate (convert to cash) your next investment before retirement, consider putting it into a retirement account to take advantage of tax benefits.
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