Why save and invest (article) | Khan Academy (2024)

Saving and investing are two important ways you can take control of your financial future. Saving allows you to set aside money for future use, while investing allows you to grow your money over time. Both have benefits for varieties of goals.

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France
a year agoPosted a year ago. Direct link to France's post “can I start investing wit...”
can I start investing with only $500?
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(4 votes)
- David Alexander
  a year agoPosted a year ago. Direct link to David Alexander's post “The short answer is "yes"...”
  The short answer is "yes". You can start investing with only $500. But perhaps a more useful thing to consider is whether or not you have enough resources SAVED first to make you sufficiently safe financially. Invested funds are harder to access in an emergency, and getting them may come with loss of some of your gains.
  So, $500 is enough to begin investing, but it may not be the wisest place to put those dollars.
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  (8 votes)
LoloR21 .
9 months agoPosted 9 months ago. Direct link to LoloR21 .'s post “"Bank accounts: A safe pl...”
"Bank accounts: A safe place to store your money, and you can often earn a small amount of interest".
How does that work in US banks? By depositing money in a bank (in a savings account), will it pay me interest?
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(4 votes)
- William Wang
  9 months agoPosted 9 months ago. Direct link to William Wang's post “You can usually find curr...”
  You can usually find current interest rates on the bank's website.
  The bank appreciates you entrusting your finances with them — you are essentially investing in that bank. The bank uses those finances to invest in other markets. As a token of gratitude, they give monthly interest so that you might continue banking with them.
  There are different types of banks, and many usually offer low rates for savings accounts. However, you can try to invest your money in a high-yield savings account and get more significant sums of interest every month.
  Comment on William Wang's post “You can usually find curr...”
  (7 votes)
  See Also
  Investing in the stock market: A beginner's guide
HollyM
7 months agoPosted 7 months ago. Direct link to HollyM's post “Whats the purpose if you ...”
Whats the purpose if you don't know and don't have enough to buy or save? Who can instead of you in your family.
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(1 vote)
- HollyM
  7 months agoPosted 7 months ago. Direct link to HollyM's post “Well ask your parents or ...”
  Well ask your parents or pray for hope:)
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  (6 votes)
PiKitty
a year agoPosted a year ago. Direct link to PiKitty's post “For the check your unders...”
For the check your understanding, I selected a gift and a phone as something you would save for, and it is marking me wrong. Does anyone know what the correct answers are? A phone and gift seem like short term things I would save up for, not invest in.
Button navigates to signup page•Comment on PiKitty's post “For the check your unders...”
(2 votes)
- Prince
  2 months agoPosted 2 months ago. Direct link to Prince's post “Yeah you're right sometim...”
  Yeah you're right sometimes stuff like that happens where they mark you wrongly, common sense tells me that nobody invests into something like an iPhone since it depreciates in value once the next new iPhone comes out, you also can't invest into a gift since you need to save money to buy it and give it away.
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  (1 vote)
amykdy
a year agoPosted a year ago. Direct link to amykdy's post “For the check your unders...”
For the check your understanding, why can't retirement be something I would save for? Although investing is also an option, I feel like many people save up money so that they can retire...
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(2 votes)
- Prince
  2 months agoPosted 2 months ago. Direct link to Prince's post “Look into *inflation* cos...”
  Look into inflation cost of food, shelter, education etc are all going up. Compound interest can also work against you from an inflation standpoint.
  $1,000,000 in 1980 now has the buying power of $230,982.70 in 2024. This means that even if you save $1M cash you might have as much money by the time you retire.
  You need to have your money invested into something like the S&P500, stocks etc for compound interest to work for you, the rich buy assets and make money work for them.
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  (1 vote)
Benjamin
7 months agoPosted 7 months ago. Direct link to Benjamin's post “Where do you go to lend b...”
Where do you go to lend bounds and invest in stock?
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(1 vote)
- David Alexander
  7 months agoPosted 7 months ago. Direct link to David Alexander's post “You contact a stock broke...”
  You contact a stock broker in your neighborhood.
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  (2 votes)
zscholl1
5 months agoPosted 5 months ago. Direct link to zscholl1's post “good time my will read do...”
good time my will read do it
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(1 vote)
- Prince
  2 months agoPosted 2 months ago. Direct link to Prince's post “Yeah it's good to read ab...”
  Yeah it's good to read about things like saving and investing.
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  (1 vote)
lydia robinson:)
6 months agoPosted 6 months ago. Direct link to lydia robinson:)'s post “whats the easiest way for...”
whats the easiest way for me to make a budget?
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(1 vote)
- Prince
  2 months agoPosted 2 months ago. Direct link to Prince's post “I made my monthly budget ...”
  I made my monthly budget using google sheets with a template, it's free and easy.
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  (1 vote)
Grayク
5 months agoPosted 5 months ago. Direct link to Grayク's post “how much money is good to...”
how much money is good to start investing and what are some reliable things to invest in?
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(1 vote)
- Prince
  2 months agoPosted 2 months ago. Direct link to Prince's post “$1000+ any lower and you ...”
  $1000+ any lower and you probably should just save more money, make sure to google anything you don't understand, you can Dollar Cost Average into the S&P 500 for lower risk and still benefit from compound interest.
  If you really wanna make a bunch of money you should do your own research a random comment from a khanacademy won't teach you enough, apps like reddit or youtube can be useful to learn more about stocks, bonds, precious metals, crypto, why saving money can mean losing buying power due to inflation(food prices increasing etc).
  Read books like The Intelligent Investor by Benjamin Graham, look into fundamental analysis and technical analysis.
  Study people like Warren Buffet(Billionaire Investor), Charlie Munger etc.
  You can also watch podcasts, make sure you understand what you are doing and do not outsource your thinking and buy just because some dude told you to yolo into a meme coin or stock going to the moon.
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  (1 vote)
imrawani838
2 months agoPosted 2 months ago. Direct link to imrawani838's post “how old are you”
how old are you
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(1 vote)

FAQs

Why save and invest (article) | Khan Academy? ›

Saving and investing are two important ways you can take control of your financial future. Saving allows you to set aside money for future use, while investing allows you to grow your money over time. Both have benefits for varieties of goals.

Read The Full Story ›

Why is it important to save and invest? ›

Saving and investing are both important to consider in your future planning. Through saving money, your money is kept safe, and easy to access should you need it. By investing early over time, your money grows in value, benefiting from the magic of compounding.

Discover More Details ›

What are two reasons to save instead of invest? ›

Saving provides a safety net and a way to achieve short-term goals, while investing has the potential for higher long-term returns and can help achieve long-term financial goals. However, investing also comes with the risk of losing money.

See Details ›

What is the 50 30 20 rule? ›

The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).

Learn More Now ›

How much of your money does the article recommend you save? ›

For many people, the 50/30/20 rule is a great way to split up monthly income. This budgeting rule states that you should allocate 50 percent of your monthly income for essentials (such as housing, groceries and gas), 30 percent for wants and 20 percent for savings.

Characteristic	Saving	Investing
Time horizon	Short	Long, 5 years or more
Difficulty	Relatively easy	Harder
Protection against inflation	Only a little	Potentially a lot over the long term
Expensive?	No	Depends on fund expense ratios; will also owe taxes on realized gains in taxable accounts

Do 90% of millionaires make over 100k a year? ›

Ninety-three percent of millionaires said they got their wealth because they worked hard, not because they had big salaries. Only 31% averaged $100,000 a year over the course of their career, and one-third never made six figures in any single working year of their career.

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Is saving $600 a month good? ›

But when it comes to what they need to be saving, it depends. So, if we're starting with a 30-year-old, they should be probably saving close to $580, $600, at least, a month. And that's if they're going to earn a high rate of return. So it depends on how aggressive and risky that they're looking to be.

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Is saving $500 a month good? ›

If you start setting aside just $500 a month for retirement at age 35, the money will still accumulate significantly into your golden years. In fact, by the time you reach 65 (when retirement typically begins), you will have saved over $300,000!

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Why is investing so important? ›

As savings held in cash will tend to lose value because inflation reduces their buying power over time, investing can help to protect the value of your money as the cost of living rises. Over the long term, investing can smooth out the effects of weekly market ups and downs.

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How important is it for you to save money? ›

The importance of saving money is simple: It allows you to enjoy greater security in your life. If you have cash set aside for emergencies, you have a fallback should something unexpected happen. And, if you have savings set aside for discretionary expenses, you may be able to take risks or try new things.

Why does it matter to save money? ›

Reducing Financial Stress: Saving money helps alleviate financial stress and uncertainty, providing a sense of stability and control over your financial future. Knowing you have savings to fall back on in times of need or to fund your goals brings peace of mind and reduces anxiety about money.