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Investing Basics

October 2015 - Investing Basics: Save for the Short-term; Invest for the Long-term

Both saving and investing involve setting aside money for the future. Saving often refers to putting money in an insured deposit account, such as an SECU money market share account or share term certificate. Investing is the purchase of stocks, bonds, mutual funds and other assets that are not insured.

The chart below lists some of the differences between the two.

  Vehicles Risk Level Best for which goals?
Savings Insured deposit accounts Low: possible loss of buying
power due to inflation
Emergency fund: short-term
goals (within 5 years)
Investing Stocks, bonds, mutual funds, etc. Medium to high: possible loss
of principal
Long-term goals: retirement,
education, etc.

Many of us save to make larger purchases or to have spending money for the holidays. It is also important to establish an emergency fund with savings equal to at least three months of expenses.

Investing helps us meet long-term goals. An example of a long-term goal is having enough income during retirement to last a lifetime. To ensure this goal is met, you should begin investing for retirement as soon as you start working. If an employer offers 401(k) matching funds, contribute enough to receive the full match. As middle age approaches, strive to save 12% to 15% of your income in a tax-advantaged account such as 401(k) or IRA. When your desired retirement date is within five years, meet with an SECU representative to see if you are on track, or if you need to save more or work longer.

Where you invest can have a big impact on your retirement nest egg. While there are no guarantees, investing in securities offers the potential for a higher return than insured deposit accounts provide over the long run. SECU offers investments through our subsidiary, Credit Union Investment Services (CUIS). CUIS is a North Carolina Registered Investment Adviser. CUIS Investment Representatives educate members about investing and the relationship of risk and return. They ask about your goals, financial circumstances, and when you plan to use the funds. If appropriate, they will recommend low-cost, well-diversified mutual funds.

Call or visit your local branch and speak with a CUIS Investment Representative about your investment and retirement goals.

Investment advisory services offered to North Carolina residents through Credit Union Investment Services. Securities offered through SECU Brokerage Services. Member FINRA, SIPC. Securities products are not credit union deposits. They are not obligations of or guaranteed by a credit union or its affiliates. They are not insured by the NCUA or any federal government agency. Securities products involve investment risks, including possible loss of principal. Investment representatives are also credit union employees, who may accept deposits.

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*Quoted rates, dividends, annual percentage yields (APY) and rates (APR) are subject to change daily at the discretion of the Board of Directors.