from the Desk of Brian Bickett, CFP®
Saving vs Investing…
Saving and investing are both important; however they are not the same thing.
My definition of saving is relatively low returns with very little (if any) risk and is used primarily for short-term goals. This usually includes a “sleep-at-night” fund and money earmarked for purchases within the next 3 years such as cars or a home. Tools used for these funds can include high-yield money market accounts, certificates of deposit and short-term Treasury notes.
Alternatively, investing allows the potential for higher returns by taking on the additional risk of loss and is used primarily for longer-term goals – typically at least 5 years away. Investing for retirement, building wealth, and intelligently turning retirement accounts into retirement income are common investing goals. Typical investments include stocks, bonds, mutual funds, exchange-traded funds (ETF’s), real estate and small business.
The Feds recent and continuing comments implying that they are ready to decrease short-term interest rates to fuel continued economic expansion is great news for investing and not-so-great news for saving. Overall this is good news for folks like yourselves who have a solid financial plan and you are intentionally both saving and investing, matching funds for specific goals. The long-term success of your financial plan is affected more by higher investing returns than decreases in short-term saving rates.
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The Dow Jones Industrial Average, S&P 500 and Nasdaq indexes have hit all-time highs today after prepared testimony from Federal Reserve Chair Jerome Powell was released. His comments acknowledged the many current uncertainties with trade and global growth. He also repeated his pledge made in June that the Fed would closely monitor developments and would act as appropriate to sustain the expansion.
For the first time since it’s origins in 1984, a woman rider took first place at the 11,000 miles in 11 days bi-annual Iron Butt Rally. An interesting side-note is that Wendy lives right here in Rapid City and completed the rally on her 2005 Yamaha FJR 1300 with more than 200,000 miles on it.
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