Table of Contents
What are 3 factors you should consider when saving or investing?
Key Takeaways
- Any investment can be characterized by three factors: safety, income, and capital growth.
- Every investor has to pick an appropriate mix of these three factors. One will be preeminent.
- The appropriate mix for you will change over time as your life circumstances and needs change.
What questions would you have as you decided how do you invest your money?
7 questions to ask before you invest
- How does the investment work?
- What are your goals?
- What are the risks of this investment?
- How much do you expect to earn on this investment?
- How long do you plan to invest.
- What are the costs to buy, hold and sell the investment?
- What other investments do you have already?
Why is it a good idea to invest money in something like stocks or bonds?
With risk comes reward. Bonds are safer for a reason⎯ you can expect a lower return on your investment. Stocks, on the other hand, typically combine a certain amount of unpredictability in the short-term, with the potential for a better return on your investment.
Why is it important to invest in both stocks and bonds?
Stocks offer an opportunity for higher long-term returns compared with bonds but come with greater risk. Bonds are generally more stable than stocks but have provided lower long-term returns. By owning a mix of different investments, you’re diversifying your portfolio.
What is savings to investment?
Saving is setting aside money you don’t spend now for emergencies or for a future purchase. Financial institutions offer a number of different savings options. Investing is buying assets such as stocks, bonds, mutual funds or real estate with the expectation that your investment will make money for you.
Why should you invest in bonds?
Bonds can contribute an element of stability to almost any diversified portfolio – they are a safe and conservative investment. They provide a predictable stream of income when stocks perform poorly, and they are a great savings vehicle for when you don’t want to put your money at risk.
Should you put your savings in stocks?
Saving is definitely safer than investing, though it will likely not result in the most wealth accumulated over the long run. Here are just a few of the benefits that investing your cash comes with: Investing products such as stocks can have much higher returns than savings accounts and CDs.
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