Understanding Investing

Saving money is an important part of any financial plan — but to grow your money significantly over time, you must also invest. Investing involves committing a certain amount of money to a venture with the expectation that it will return a profit. The size of the profit depends on the level of risk you assume.

Investing requires taking on some risk, which can lead to a greater potential reward or loss. Investing is different from saving money because there is no guarantee you will earn a return or that you will even get the entire principal back.

Experts recommend diversifying investments by balancing riskier ones with low-risk choices. Safe investments include certificates of deposit (CDs), Treasury bonds and money market funds. Riskier investments include stocks and mutual funds. Before you get started, be sure to research all your options.