Investing is a way to make money grow. People invest money in things like the stock market and real estate in hopes that the money they put in—their initial investment—returns more money over time.

Why Invest

Investing comes with risk, or the chance of loss, but it also comes with the possibility of growth way beyond the amount you started with. It’s a common method for achieving long-term financial goals, like retirement or paying for college.

You don’t need a lot of money to invest. Even small amounts, like one dollar, can grow much larger in the right investments over time. The earlier you invest, the more time your money has to grow.

Investing vs. Saving

There are similarities between investments and saving accounts. Both are ways to set aside money for the future.

With savings accounts, people usually put aside money for a specific, short-term goal, such as purchasing a car, paying for a vacation, or building an emergency fund. This money earns a small amount of interest, and the cash is guaranteed to be there when you need it.

With investing, it’s best to use money you don’t need for a long time. Investments aren’t guaranteed, which means it’s possible to lose some or all of the money you invest. If you need your money, it takes more time to withdraw invested money than a regular savings account. There could even be penalties and fees, depending on how you invested.

Over time, investments typically grow at a higher rate than the interest on a savings account. That’s why it’s important to use investing for long-term goals, not money you need right away.

Both investing and saving grow your money beyond the initial amount, so the right approach depends on your goals and situation.


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