Consider debt, risk, and emergency funds when determining your financial steps.

Learn about saving/investing with these five questions

Saving and investing are both important components of a solid financial foundation. They also have unique properties that determine when each one makes the most sense.

The level of risk and reward is the most significant difference between the two. Savings often result in lower returns (through earned interest), but doing so carries little risk. Investments, on the other hand, can yield significantly higher returns, but also carry a greater risk of loss.

Since 1957, when the S&P 500 began tracking, stocks have averaged an average annual return of about 10%. By contrast, high-yield savings accounts typically yield less than 2%. While stocks are much more volatile in terms of price swings (as you may have noticed this year), this opportunity for higher returns makes them a valuable weapon in your financial arsenal. But it’s important to know when to use them.

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