Ashley Temer is a Financial Representative with Northwestern Mutual who helps professionals, families, and business owners plan for financial security. She’s here for your “Money Minute.”
If you haven’t already, it is important to develop the habit of saving and investing. When you’re setting aside money for the future, be strategic about where you place your money by saving some and investing the rest.
Saving is setting aside money in a safe account where it is unlikely to lose value. The tradeoff for that security is that you will likely receive a low-interest rate, and the value of your money can decrease due to inflation and an increase in the cost of living. Money put into savings accounts should be for short-term expenses or emergencies.
Investing is putting money aside for longer-term goals. Investments involve taking on the risk that you may lose all your money invested; therefore, you may be rewarded over longer periods of time with greater returns.
Throughout your life, you’ll likely need a mix of both saving and investing strategies. It is a good idea to start making monthly contributions. A great place to start investing is by contributing to a retirement plan like a 401K. There are many different ways to save and invest.