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Money Tips for Kids: Growing Money

Investing can be Rewarding, but it’s also Risky

A savings account is a great place to store your money at first. It’s safe and it pays a little interest. But it won’t make you rich! Growing your money requires that you move some of it into investments with a higher rate of return.

Many financial experts suggest that your money should be growing somewhere between 5% and 10% per year. You won’t get that from a savings account these days.

Just compare $100 in a savings account earning 1% interest per year with an investment earning 5% per year and another earning 10% per year.

At 1% interest, you’re earning just a few pennies per year. After 20 years, you’ve earned only $20. With a 5% return, you more than double your money to $271.85. And with a 10% return, your money grows more than seven times to $738.70!

However, investments aren’t insured like your savings account. You take the risk of losing everything if your investment becomes less valuable.

Questions:

  1. Would you rather know that your money is safe while it grows a little bit, or would you be OK with taking a risk while your money possibly grows a lot?
  2. Are you willing to put a portion of your savings away for a long time to watch it grow?
  3. Is there a company or product that you would like to invest your money in?

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