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Most medium- and long-term goals require more than saving, they require investing. Our culture has become used to borrowing to reach goals, but if you borrow for everything you can't afford, you will be using future income to repay loans and credit card debt. You can't borrow for everything. You will still need a substantial down payment to purchase a home or buy a car. And borrowing for some things, like retirement, doesn't make sense.
The Big Picture. . . Investing
Saving and Investing both have a place in your future happiness. Investing has a big advantage because your can choose ways that allow your money to compound over time.
How does your money compound? It depends on your investments, how much they earn, how often compounding is calculated, and how long compounding has been working for you.
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Saving and investing allow you to make your hard-earned money work for you. Interest, dividends, and capital gains build wealth over time. For example, $1000 invested in the stock market at an average rate of 10.4 percent (Ibbotson Associates) will grow to:
- $2,690 in 10 years
- $4,411 in 15 years
- $7.234 in 20 years
- $19,457 in 30 years
To learn more about how your investments can grow over time,
go to the Compounding
Calculator.
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