Should you save or invest?
Decide based on when you need the money and how much risk you can take.
You will learnChoose an account and level of risk that fit when you will need the money.
Quick scenario
Choose an answer to see the explanation.You need $900 for a laptop in nine months. Which factor should guide the choice first?
Worked example
Saving for a laptop
A $900 laptop needed in nine months calls for about $100 a month in savings. A decades-away goal may allow someone to consider investing based on risk tolerance, emergency needs, debt, fees, and the ability to withstand losses.
$900 ÷ 9 months = $100 per month
Key ideas
Three things to know
When to save and when to invest
Savings emphasizes stability and access for near-term needs. Investing accepts uncertainty and possible loss in pursuit of longer-term growth. Neither is automatically better; the timeline changes the job.
Separate contributions from returns
Putting in $25 each month for five years adds $1,500 of contributions. At a purely hypothetical 5% annual return compounded monthly, the illustration reaches about $1,700. That result is not guaranteed and excludes taxes, fees, and inflation.
What diversification can and cannot do
Spreading money across investments can reduce concentration in one company or asset. It cannot prevent loss. Understand what you own, what it costs, and when you may need the money.
Practice
Name the goal before choosing a product
Use the example first. Then change one number and compare the result.
Interactive calculator
Calculate a monthly savings target
Start with the goal amount and the date you need it.
Knowledge check
Check your understanding
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