Why Invest?
Investing helps money grow faster than savings accounts by using compound interest and market growth.
- Wealth building: Assets increase in value over time.
- Retirement: Funds grow for future security.
- Beating inflation: Investments can outpace rising costs.
Common Investment Types
- Stocks: Shares of companies, higher risk but higher potential returns.
- Bonds: Loans to government/companies, lower risk, steady income.
- Mutual funds & ETFs: Bundles of investments, provide diversification.
- Retirement accounts: 401(k), IRA — special tax benefits.
Risk vs. Reward
Every investment carries risk. Higher risk = higher possible returns, but also higher chance of loss.
- Short term: Safer options like bonds or savings.
- Long term: Stocks and funds usually perform better.
Diversification
Spread your money across different assets. If one goes down, others may balance it out.
Don’t put all your eggs in one basket.