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Investing can help you to achieve your long-term financial goals, such as retirement, buying a home and building your wealth.

Investing is different than saving. Investing is for long-term goals that typically take 5 years or longer to achieve. Investing usually carries a higher risk of losing money than saving, but if done wisely, the earnings can be substantially higher than saving.

Saving is for short-term goals that take 3 years or less to achieve. Some short-term goals may include buying a car or establishing an emergency fund. Savings accounts are much safer, provide easy access and typically earnings are very low.

Start early. The earlier you begin to invest, the more time your money has to grow. For example, if you begin to put away $100 a month at age 25, with an 8% return, you will have $349,100 by age 65. If you follow the exact same plan, but begin at the age of 35, you will only have $149,035 by age 65.

Where to start. Before you begin investing, you should make sure that all other areas of your financial life are organized. Develop a spending plan and make sure you can follow it. Have a consistent savings plan in place, along with 3-6 months of living expenses readily available in case of an emergency. Finally, pay off all high-interest debt, such as credit cards.

When you begin, it is a good idea to enroll in your employer’s retirement plan. When you switch jobs, roll the money over into an individual retirement account (IRA) or your new employer’s plan. Whatever decision you make, do not cash your plan out!

It’s also a good idea contribute a fixed amount each month. Ask your bank or employer about having it automatically deducted from your savings account or paycheck, so you won’t forget.

Acknowledgement: This fact sheet was originally developed by youth and staff at, a website that helps teens get through tough times. 

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