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Why You Should Invest, Rather than Save

By Charles Hopkins Published 09/19/2006 | Entrepreneur

Nobody ever became a millionaire simply by stashing all of their money under their bed, in their checking account or in a savings account that only generated a quarter of one percent every year.  Nope, if you are looking to maximize your money and experience as much growth out of your cash as you possibly can, then you will want to become an investor rather than a saver. By investing your money into stocks, bonds and mutual funds, you can generate far more profit than you could ever hope to imagine with a typical savings account. So much in fact, that if you only invest a small amount from every paycheck, you will be a millionaire in no time hands down. Unfortunately, investing carries with it a certain amount of risk, but to most people, the risk is negligible compared to the ultimate payoff you could receive.

If you want to take the safe road with your money, you have two different options. You can either put your money into a savings account that offers a high rate of interest or you could transfer your money into a certificate of deposit. With a savings account, the minimum interest you should look for is around four percent. There are currently very few banks that offer such a high rate, so you may have to do quite a bit of searching before you invest. Alternatively, a certificate of deposit, known as a CD, will give you interest rates that are several percentage points higher, but you will be required to keep your money in the CD for at least six months at a time for maximum returns.

In order to make the most of your money, you will want to invest it in the stock market or into any of the millions of bonds you can purchase through a stock broker. All of these forms of investment involve a certain amount of risk and the money you will make with these investments is directly related to the amount of risk involved. The least risky investment is a bond. You can purchase these bonds from private corporations or through the federal and state governments of the world. Each month, you will earn a certain percent of your investment since you, as a bond holder, are acting like a creditor who receives money in the form of interest rates each month.

The highest amount of investing risk comes from the stock market. Buying stocks and mutual funds are some of the most daring things you can do with your money; but they also have the highest possible payout for your money. Many people have become millionaires overnight thanks to the stock market.  All it really takes is to buy one hot stock that will go up many points in a single day making you rich beyond your wildest imagination. However, you must remember that for each person that makes thousands in the stock market, there are just as many people who have lost that same amount.  Is the risk really worth it? Well, if you want to be a millionaire, then it certainly is.