What do you know about saving and investing?

Consumers can protect their investment dollars by learning the difference between saving and investing.

Are saving and investing the same thing? Actually, no. It is important to understand the differences between the two terms. You can think of saving as something you do to reach short-term goals while investing is focused on reaching long-term goals.

eXtension says that saving provides funds for emergencies and for making specific purchases in the relatively near future - usually three years or less. It’s important to keep the funds safe and to make sure they are easily accessible when you need the cash. Because of these features, savings dollars generally don’t earn much interest and also lose purchasing power because inflation decreases its value over time.

Investing focuses on increasing net worth and achieving long-term, more than three years, financial goals. Investing involves risk, which is the possibility of losing the principal amount you invested. It also has the potential for earning higher interest. An investment vehicle can include stocks, bonds, and mutual funds.

LaShawn Brown, Extension Educator with Michigan State University Extension, encourages consumers to complete eXtension’s online self-study course Investing For Your Future. It’s an 11-unit home study course that was developed by the Cooperative Extension system for beginning investors with small dollar amounts to invest.

Before you choose to invest, take this Money Smarts quiz from the U. S. Securities and Exchange Commission. It will give you a quick snap shot about where you are with investing and help you determine if you should do a bit more investigation and seek out additional education.

Federal and state securities laws require brokers, investment advisers, and their firms to be licensed or registered, and to make important information public. But it's up to consumers to find that information and use it to protect their investment dollars.  Mark B. Robinson, CIMA®, AIFA®, developer of Michigan’s Investor Education in Your Community® stated that “Financial Services Providers have a social imperative to deliver the very best to their clients”

Before Michigan investors engage the services of any individual or company in the securities industry they should contact the State of Michigan’s Office of Financial and Insurance Regulation (OFIR). The agency can help investors access extensive employment, disciplinary, and registration information. Call OFIR toll-free at (877) 999-6442.

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