There is a difference between saving and investing. When you put aside money for short-term goals it is called saving. Investing, on the other hand, is a long-term financial decision-making process to help you achieve your financial goals. 

You can save by putting your money in an insured bank account, certificate of deposit, or some other alternative that allows you to access your money easily. When you invest, you are seeking a greater return, but that usually comes with some risk. Either way, you should look at the risk and return for each option.

 

A good rule of thumb when saving money is to pay yourself first. That means, when you get paid, try to set a certain amount aside. Even if you save $1 or $5 per check, you are working towards a goal.

 

Savings accounts are vital to your economic security and planning. Having a savings account comes in handy when those unexpected emergencies happen. Savings accounts are generally four types of products: Statement savings account, club account, money market account, and certificate of deposit (CD).

 

Savings accounts earn interest daily or yearly and allow you to control your access to your money.

 

Savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA) up to a certain dollar amount.
 

Shop around at different banks to see who offers the best product.

 

If you would like to earn an interest bonus on your savings account, open a Treasury sponsored SaveNOW account. You will receive a 3.25% interest rate increase after receiving a year of financial literacy education. To learn more visit www.savenow.ohio.gov  or www.ohiotreasurer.gov.
 

 

Equities are investments that represent an ownership position or “equity” in a corporation and a claim on a proportionate share of the corporation’s assets and profits (equity securities or corporate common stock). Equities are commonly referred to as “stocks.”

 

Fixed income securities are securities that pay a fixed, or set, rate of interest. Examples of fixed income securities are US Treasury bonds, CDs, and money market securities.

 

Growth stock is stock of a company which is increasing its revenues and/or earnings faster than the average in its industry or the overall market.  These companies usually pay little or no dividends, using their profits to reinvest in the company and foster growth.  These stocks have the ability to have a high rate of return, but also carry a large amount of risk. 

 

Investing your money can be a somewhat intimidating process, and as a result, many people end up either hiring an investment professional to do it for them or just not doing it at all. Fear not! Investing is not as scary as it seems. Below are a few easy steps to get you on your way.

 

1. Before you begin actually investing, you must determine your investment goals. For what are you investing? Is it for only for the short-term, like a vacation or a new car? Is it for a long-term goal such as college education or your retirement?

 

2. The next step is to determine your timeline. This will give you an idea of how long to invest your money. When will you need the money? Will you withdraw it over a period of time or will you take it out in a lump sum?

 

3. Determine your tolerance for risk. What is your investment experience? How much risk do you feel you can handle? What will your reaction be if you receive your statement and your investments are down?

 

4. Next, design your investment “pie.” Given the answers to the questions above, how are you balancing risk and return? It is important to have a balanced and diversified portfolio. It is never good to have all of your financial “eggs” in one basket.

 

5. Finally, it is time to select your investments. Gather information about each of the investments you are considering. For example, if you have selected a mutual fund, in what products does the mutual fund invest? What are the fund expenses? How has the fund performed compared to similar funds?

 

There are online sites that allow you to buy stocks and other investments for a small transaction fee. For more information about online investing visit www.investingonline.org.

 

You can also hire an investment professional to give you financial advice and manage your portfolio for you. Do your homework and interview multiple professionals before selecting an advisor. Remember, you are paying for these services, so you want to ensure that you both share the same investment philosophy.  It is also important to remember that financial professionals do not have a crystal ball to see into the future.