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 may decide to invest your money to fund your goals. Before you invest, make sure you have answers to 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? Stocks, bonds, and shares in mutual funds can usually be sold at any time, but 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. Keep in mind, just because an investment has done well in the past doesn’t guarantee it will 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 and, sometimes, state income tax as well. Tax-deferred investments for special goals, such as paying for college and retirement, let you postpone or even avoid paying income taxes.

More Information on Investing

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

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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. In return, the government promises to pay you back the entire amount, also known as the face value, when the security matures.

Learn about the different types of Treasury securities:

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

  • Banks, brokers, and other financial institutions
  • Online through Treasury Direct
  • Payroll savings plans - Save money from your paycheck and invest it in savings bonds through payroll direct deposit.
  • Public auctions - You can participate in an auction to buy securities directly from the Treasury.

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Savings Bonds

U.S. savings bonds are one of the safest types of investments because they are endorsed by the federal government.

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 your bond has been lost, stolen, or destroyed. Manage and find the value of savings bonds using these tools:

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.

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Choose a Financial Professional

A financial professional can have multiple titles and may be licensed to provide products and services including investments, financial planning, and insurance. Before researching financial professionals, find out what the titles and licenses mean, as well as the 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.

When choosing a broker or investment adviser, research the person's education and professional history as well as the firm the person works for. 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 will help your adviser understand the type of lifestyle and financial needs you have.
  • 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 serious complaints from investors? Search for individuals with court or commission orders against them. People on this list have been named as defendants in SEC federal court actions or respondents in SEC administrative proceedings. Use FINRA's BrokerCheck tool to review licensing, employment, and disciplinary information on 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 depends 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 and 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

Get tips and information to help you make an informed decision when hiring someone who provides financial and investment services:

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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. 
 

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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: June 27, 2018