Saving and investing are not the same thing — though people sometimes use those words interchangeably. Understanding the difference can help you reach your financial objectives. In the end, a mix of both may be the optimal strategy.

1. Define your goals

When you are saving, you are concerned primarily with securing your money, while not losing any of its value. Savings may be helpful for an emergency fund, a short term goal, or other type of need where you may need to tap into those funds soon or quickly.

When you're investing, you give your assets the potential to grow over time. You should be prepared to accept more risk with investment money than you are with your savings. With the opportunity for growing your money comes the risk that your account value may decrease. If you have many years before you need the money to reach a goal, such as your child's college education or your retirement, you may have time to recover from decreases in value.

2. Find the best place to save

When you save, you may want to consider a low-risk place to put your money with convenient access. Depending on your choice, you might earn interest or you might not. Possible options can include keeping the funds in your checking account, savings account, or certificate of deposit (CD).

3. Explore investment options

When you invest, you are buying an asset that you expect to grow in value. Since the value may fluctuate, consider investing money that you probably won’t need in the near future, allowing the benefit of time and compounding. You may want to be able to sell when the market conditions are favorable, not on short notice. To get started investing, the options can include working with a Financial Advisor or choosing to become a self-directed investor. Another option is robo-investing, providing digital investing with smart technology to recommend a portfolio that fits the investor's preferences.

Find investments that fit your goals, time horizon, and risk profile. If the investments you choose make you nervous or uncertain about your future, you may be in an investment profile that’s too aggressive for your risk tolerance.

Getting the most from your money means understanding the difference between saving and investing — and how to use both. Savings products may provide greater safety and convenience compared to investing. Depending on the investment, investing may provide better returns, though with greater risk than savings and more limited access to funds. Understanding the balance between savings and investing can help you achieve your short- and longer-term goals.

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