Answer:
ExplanaYour friend says, “I have some extra money, but I’m not sure if I should save or invest it.” What key questions would you ask your friend to help them figure out what to do?
Key questions I would ask are, Do you want the highest return possible? Are you interested in setting money aside to take advantage of compound interest and letting it grow over time? If you choose to invest do you understand investments come with volatility or risk and may not give you the results you wanted? Which do you prefer, saving up money and playing it safe with no risk by putting it in a bank with 0-2% return annually or investing and risking a little bit by investing with a potential 6-10% return annually? What would you invest in?
What is the advantage of investing early for retirement?
Investing at an early age will wield a significantly higher return than investing any time later. The more time you wait to start investing the less return you could end up getting back by the time you come of age to retire. Starting early has a much larger payout and if you start early you can even get a return of up to a million dollars, hypothetically if you start by the age of 20 by investing 200$ a month.
If investing can bring higher returns, why should you put money in a savings account at all?
Putting money in a savings account is safe, putting cold hard cash aside has next to zero risk. Money is also available whenever you need it. This is preferable when there is an emergency or an immediate need for the money. Having cash ready in a savings account is also useful when you’re saving up for a purchase, such as a car, a boat, a new engine, etc.
What 3 tips would you give someone who is about to invest their money for the first time?
First, starting off small is important, getting a taste of what it is like and familiarizing yourself with it, buying proven funds, you don’t need a winning stock to be successful. Second, to start as soon as possible because the return will be much rewarding if you do so and avoid waiting for when the time is right. Third, have patience, the reward is best over time as compound interest accumulates and setbacks are common so don’t panic when the market has problems.
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