“…(wealthly) people see every dollar as a ‘seed’ that can be planted to earn a hundred more dollars … then replanted to earn a thousand more dollars.”
T. Harv Eker, Secrets of the Millionaire Mind
Only about 55 percent of Americans invest in the stock market, according to a 2015 Gallup poll. For Americans to create and grow wealth, they must save and take steps to learn about and start investing.
Saving and investing often are used interchangeably, but there is a significant difference.
- Saving is setting aside money you don’t spend now for emergencies or for a future purchase. It’s money you want to be able to access quickly, with little or no risk, and with the least amount of taxes.
- Investing is buying assets such as stocks, bonds, mutual funds or real estate with the expectation that your investment will make money for you. Investments usually are selected to achieve long-term goals with increased risk and volatility. Generally speaking, investments can be categorized as income investments or growth investments through capital appreciation.
Start Investing Early
One of the best ways to build wealth is by saving and investing over a long period of time. The earlier you start, the easier it is for your money to grow. If you have a workplace retirement plan, consider enrolling and maximizing your contribution—there are tax advantages and you may even be eligible for a match from your employer. Set up regular, automatic contributions. Investing early is especially important for retirement.
Make savings a priority
Keep your focus on your dreams and goals. Do the best you can to save and invest at least 15%-20%. It may not be always possible to hit that target every year due more pressing financial demands, but try. Your future depends on your efforts—make your retirement a priority.
Consider this …
If you deposited $2,000 in a savings account at 3 percent annual interest, it would grow to $3,612 in 20 years (before taxes). The same $2,000 invested in a stock mutual fund earning an average 10 percent a year would grow to $13,455 in 20 years (before taxes).
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