Understanding Saving and Investing

Saving typically involves higher risk than investing.

Investing usually offers higher potential returns than saving.

Saving is only for short-term goals, while investing is only for long-term goals.

Saving and investing are essentially the same.

$1,150.00

$1,157.63

$1,200.00

$1,250.00

Compound interest is calculated only once at the end of the investment period.

Compound interest includes interest on the initial principal and the accumulated interest from previous periods.

Compound interest rates are always higher than simple interest rates.

Compound interest is only applicable to long-term investments.

3.00%

3.04%

3.05%

3.06%

Stocks

Bonds

Real estate

Savings account

To increase the risk of the portfolio

To maximize potential losses

To spread risk across different asset classes

To focus on a single type of investment

$632.00

$634.89

$635.50

$640.00

Higher risk always guarantees higher returns.

Lower risk always results in higher returns.

Higher risk is generally associated with the potential for higher returns.

Risk and return are not related.

6%

8%

9%

10%