Investing Tips
When you’re following your roadmap to achieve your financial goals, make sure that you don’t lose money along the way. From 1995 to 2005, consumer prices rose an average of nearly 3.5 percent every year. If you kept $1,000 in cash during those years, by 2005, assuming no interest, the buying power of that money would have declined to about $700.
By not investing the money, you would have lost some of it. But if you put the $1,000 into investments, such as a mutual fund or stocks and bonds, you at least had a chance that the buying power of your money would be the same or higher—because the investment went up in value, or because you received dividends or interest on it, or both. So how should you invest the money you’re saving for your future? There are lots of choices: mutual funds, index funds, stocks and bonds are some of the options. In each category there are thousands of possibilities, but investing doesn’t have to be complicated if you follow these basic principles. If the price rises 6 percent again the next year, you’ll have $561.80 ($530 times 6 percent). If you choose your investments well and keep track of how they’re doing, this pattern can continue as long as you do not sell them. The other way to make money investing in stock is by receiving dividends. A dividend is a cash payment issued by the company—it may be issued monthly, quarterly or annually—as a way of sharing its profits with stockholders. Even if the price of the stock does not go up, you still make money on it.

Match Your Investments to Your Goals
You may be saving for your child’s college in five years, or for your retirement in 25 years. The appropriate investments for these goals are different. The time your money will have to grow has a lot to do with the type of investment that’s right for you. The longer you have until you’ll actually need to spend the money, the more risk you can take with your investment. Over many years, investing in stocks grows your money