Investing can be rewarding, but it’s also risky
A savings account is a great place to store your money at first. It’s safe and it pays a little interest. But it won’t make you rich! Growing your money requires that you move some of it into investments with a higher rate of return.
Many financial experts suggest that your money should be growing somewhere between 5% and 10% per year. You won’t get that from a savings account these days.
Just compare $100 in a savings account earning 1% interest per year with an investment earning 5% per year and another earning 10% per year.
At 1% interest, you’re earning just a few pennies per year. After 20 years, you’ve earned only $20. With a 5% return, you more than double your money to $271.85. And with a 10% return, your money grows more than seven times to $738.70!
However, investments aren’t insured like your savings account. You take the risk of losing everything if your investment becomes less valuable.
- Would you rather know that your money is safe while it grows a little bit, or would you be OK with taking a risk while your money possibly grows a lot?
- Are you willing to put a portion of your savings away for a long time to watch it grow?
- Is there a company or product that you would like to invest your money in?