Basics of Saving and Investing for Students
When saving, you use financial instruments to safeguard and accumulate funds for short term spending goals. Saving instruments typically earn interest, have minimal or no risk to principal, emphasize safety and liquidity, but are subject to inflation risk. Before you even think about investing, it is recommended to maintain a "rainy day fund," an emergency fund with money that is liquid (easily accessible) and the principal is not at risk.
When investing, you use financial instruments to grow your money for long term goals such as retirement. Investing products allow you to gain a profit through interest, dividends, and/or increase in value, but your principal is at risk of loss. Each type of investment carries a certain level of risk. Understand how the investment works and if it's right for your age, investment objectives, and risk tolerance.
Even though you're a young student, don't delay in getting your saving and investing plan started--your future financial security depends upon it! Read more about getting on the path to saving and investing. For more general information, you can visit the Investor Resource Library, A to Z.