Saving and Investing

Saving

Money that is set aside for short-term purposes such as paying bills, taking a trip, or building a financial cushion. Saved money should be liquid (easily accessed) and stable, not somewhere where it could decrease in value. When it comes to savings, liquidity and stability are more important than high rates of return. Any investment with a high rate of return lacks stability and can decrease in value in the short-term. The most common types of savings accounts are below. If you’re looking for a reliable, safe bank with good rates of return, I recommend CIT Bank. They’re an online bank only, saving them money that can be passed on to the consumer in the form of higher interest rates.

Chart showing attributes of various savings vehicles

  • Bank savings and checking accounts

  • CDs

  • Money Market accounts

Investing

Investing is money we are trying to grow for a long-term purchase. People typically invest to grow wealth for events such as retirement or paying for college. Investing should only be done with money that is not needed in the next 3-5 years. Because investing seeks to provide high returns, there is higher risk and investments can lose money in the short-term. The good news is that the returns on many long-term investments will far outpace savings vehicles in the long run. Investments commonly include;

stack of coins getting larger

  • Stocks

  • Bonds

  • Mutual Funds

  • Exchange Traded Funds (ETFs)

  • Options

  • Annuities

  • Cryptocurrencies

Many investors hold investments inside retirement accounts or brokerage accounts, which allow the trading of many of the investments above.