When would it be a good idea to invest your money instead of putting it in a savings account? When you won’t need the money for a long time. You just studied 27 terms!

What might convince an investor to buy stock or mutual funds? increase both risks and returns. reduce both risks and returns. increase liquidity of investments.

Here are the top 10 reasons to invest your money:

• Grow your money. Investing your money can allow you to grow it.
• Save for retirement.
• Earn higher returns.
• Reach financial goals.
• Build on pre-tax dollars.
• Qualify for employer-matching programs.
• Start and expand a business.
• Support others.

Investing in stocks is an excellent way to grow wealth. For long-term investors, the stock market is a good investment even during periods of market volatility — a market downturn simply means that many stock investments are on sale.

Saving money should almost always come before investing money. As a general rule, your savings should be sufficient to cover all of your personal expenses, including your mortgage, loan payments, insurance costs, utility bills, food, and clothing expenses for at least three to six months.

Most financial planners advise saving between 10% and 15% of your annual income. A savings goal of $500 amount a month amounts to 12% of your income, which is considered an appropriate amount for your income level.

How to Pick Stocks

1. Decide to pick one stock or many stocks.
2. Pick a strategy for choosing stocks.
3. Seek out value.
4. Take analysts predications with a big grain of salt.
5. Decide how long you want to hold the stock.
6. Choose a broker and make the trade.
7. Determine the kind of trade you plan to execute.
8. Execute the trade.

A stock’s price drops for many reasons, and some have nothing to do with the soundness of the investment. The period immediately after a stock’s price has fallen can be a great time to buy low if you’ve done your research into the company, and particularly if you can identify why the stock’s price is low.

Yes, you should invest when the market is down—and when it’s up and when it’s sideways. After all, “buy low, sell high” is a standard mantra for successful investors. However, just like regular shopping, it’s not wise to buy things because they’re on sale.

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