Investing 101
If you have been consistently achieving your budget goals and living below your means, then it should follow that you are accumulating savings. There are two primary options you have once savings begin accumulating: hold onto the money in the form of cash or invest it. It is imperative that you understand the advantages and disadvantages surrounding each position.
OPTION 1: Stuffing your money under the mattress will ensure that you do not lose a substantial amount, but it also follows that your savings will be devalued by the annual rate of inflation. Some are perfectly content with this and would rather accept the annual decline in the level of their savings than assume the risk of investing.
OPTION 2: An investment is the commitment of your current resources with the expectation of future gain. Do not mistake this definition; investing is by no means the correct choice for everyone nor does it guarantee positive future returns. However, it is beneficial for all Americans to at least understand investing because everyone can create a portfolio that is customized to his or her financial situation.
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