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Saving and Investment Options

Learn how to budget to reach your savings goals. Get the basics on a variety of investments, including savings bonds and other Treasury securities backed by the federal government.

Things to Consider Before You Invest

If you want to pay for retirement, college, or a home, you can invest your money to fund your goals. Before you invest, make sure you can answer all of these questions:

  • What type of earnings can you expect on your investment? Will you get income in the form of interest, dividends, or rent?

  • How quickly can you get your money, if you need to sell or cash in your investment? You can sell stocks, bonds, and shares in mutual funds at any time. However, there is no guarantee you’ll get back all the money you invested. Other investments, such as certificates of deposit (CDs) or IRAs, often limit when you can cash out.

  • What can you expect to earn on your money? Bonds generally promise a fixed return. Earnings on most other securities go up and down with market changes. It’s important to know that if an investment has done well in the past, it is not guaranteed to do well in the future.

  • How much risk is involved? With any investment, there is always the risk that you will not get your money back or the earnings promised. There is usually a trade-off between risk and reward. The higher the potential return, the greater the risk. While the U.S. government backs U.S. Treasury securities, it does not protect against loss on any other investments.

  • Are your investments diversified? Putting your money in a variety of investment options—diversifying—can reduce your risk. Some investments perform better than others in certain situations. For example, when interest rates go up, bond prices tend to go down. One industry may struggle while another prospers.

  • Are there any tax advantages to a particular investment? U.S. savings bonds are exempt from state and local taxes. Municipal bonds are exempt from federal income tax. Sometimes, state income tax is exempt as well. Some tax-deferred investments with special goals, including college tuition and retirement, let you avoid paying income taxes or allow you to postpone payments.

More Information on Investing

Find tools to research investments and learn how to avoid investment fraud:

Treasury Securities

Treasury securities are debts issued by the federal government's Bureau of Fiscal Service. When you buy a Treasury security, you are lending money to the federal government for a set amount of time. The government will repay the entire amount (the face value) when the security matures.

Learn about the different types of Treasury securities:

  • Series EE and Series I Savings Bonds—Securities that offer a fixed interest rate over a fixed period of time
  • Treasury Bills—Short-term securities that mature between a few days and 52 weeks
  • Treasury Notes—Medium term securities that mature between one and 10 years
  • Treasury Bonds—Long-term securities, with a 30-year term. These bonds pay interest every six months, until the bond matures.
  • Floating Rate Notes (FRNs)—Two-year term securities with variable interest rates
  • Treasury Inflation-Protected Securities (TIPS)—Securities with principal values that change based on inflation, but with fixed interest rates for five, 10, or 30-year maturities

You can buy Treasury securities for yourself or as gifts in several ways:

Savings Bonds

U.S. savings bonds are one of the safest types of investments because they’re endorsed by the federal government. When you buy a savings bond, you’re essentially loaning your money to the U.S. government. When you redeem your savings bond, the government pays you back with interest.

Learn More About Savings Bonds

Visit TreasuryDirect, a website from the U.S. Department of the Treasury, to learn about savings bonds. This includes how to cash them and what to do if you have stolen, destroyed, or lost savings bonds. You can also manage and find the value of savings bonds using these tools:

There is no way to search online for forgotten or unclaimed savings bonds. But you can search for other unclaimed money from the government.

Give Savings Bonds as Gifts

You can give savings bonds for many occasions, such as birthdays, weddings, and graduations. Learn how to give savings bonds as gifts. Keep in mind, paper savings bonds are no longer sold at financial institutions. But, you can buy savings bonds electronically through TreasuryDirect.

Choose a Financial Professional

Financial professionals provide products and services that include investments, financial planning, and insurance. They are also licensed and can have multiple titles that depend on the services they offer. Before researching financial professionals, find out what the titles and licenses mean. It's also important to look up their educational, work experience, and ethical requirements. Keep in mind that a professional title is not the same as a license. The Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and state regulators do not grant or endorse any professional titles.

Questions to Ask When Choosing a Financial Professional

When you select a broker or investment adviser, research their education, professional history, and the firm they work for. Then, make sure you have answers to all of these questions:

  • Do you communicate well with the adviser? It’s important to make sure they will listen to your needs and keep you updated on your investments.

  • Has the person worked with others who have circumstances similar to yours? This helps your adviser understand your lifestyle and financial needs.

  • Is the person licensed in your state? Contact your state securities regulator to find individuals and firms that are registered in your state. Ask whether the regulatory office has any other background information.

  • Has the person had any problems with regulators or received complaints from investors? Search for individuals with court or commission orders against them. People on this list have been asked to appear before the SEC federal court. Or, they have been named as defendants in SEC administrative proceedings. Use FINRA's BrokerCheck tool to review licensing, employment, and disciplinary actions against financial brokers, advisers, and firms. You may also contact your state securities regulator or the SEC.

  • How is the person paid? Is it an hourly rate, a flat fee, or a commission that is based on the investments you make? Does the person get a bonus from their firm for selling you a particular product? Independent advisers don’t need to promote specific funds. That way, they can offer you more flexible investment options.

  • What are the fees for setting up and servicing your account? Firms can charge fees based on the number of trades or the amount of your assets.

Tools to Choose a Financial Planner or Investment Adviser

Use these tips when choosing a financial planner or investment adviser:

Manage Finances and Save Money

To help you manage your money and reach your saving goals:

Create a Budget

A budget is your plan for how you will spend money over a set period of time. It shows how much money you make and how you spend your money. Creating a budget can help you:

  • Pay your bills on time.
  • Save for unplanned expenses in the future.  
  • Prepare for retirement.

Download a budget spreadsheet that you can use to manage your monthly income and expenses. 

Consider Ways to Save

Saving money involves looking for deals and buying the quality items you need at the best price. You can save money by comparison shopping--comparing the prices and quality of products you plan to buy. MyMoney.gov offers ways to manage your spending and build your savings to achieve your goals.

Invest in Long Term Goals

Investing is a way to make money grow, by buying shares of stocks, mutual funds, bonds, or real estate. When you invest, there is risk that you could lose the money you invest. In general, the greater the earnings you can make, the greater the risk. You can save for long term goals, such as retirement and college education, by investing. Learn how to save for emergencies and short and long term goals, and become an informed investor. 
 

Video: Steps to Make a Budget

See this video from the Federal Trade Commission to learn how to make a budget and plan your finances.

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Last Updated: November 20, 2019

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