Montage Financial Services

What is investing?

Investing is how you make your money grow, or appreciate for long term financial goals. It is a way of saving your money for something further ahead in the future.

Investing is the proactive use of your money to make more money or, to say it another way, it is your money working for you.

It’s long-term: You usually want to use money you don’t need now for goals many years ahead.

It uses money now with the expectation of making money in the future: With investing, you have to spend money to make money. You do this with the expectation of getting a return on your money.

What is saving?

Saving is a plan to set aside a certain amount of your earned income over a period of time in order to be able to accomplish a goal. It is a plan of action where you plan on acquiring a certain amount of money by redirecting some of the money you have received from your various sources of income.

How is investing different from saving?

Saving is a passive activity, even though it uses the same principle of compounding. Saving is more focused on safety of principal (the amount you start out with) and less concerned with return.

Your focus in investing is on return and can run the spectrum from conservative to very aggressive in terms of risk. One way you measure results is by the expected return weighed against the anticipated risks.

Unlike most savings accounts, investments are not insured and there is no guarantee that you will achieve a positive return. However, history has shown that if you are willing to invest for the long term and spread your risk, chances are that you will be able to create financial wealth.

Why invest?

There are generally three main reasons to invest. You can invest to: