📈 UNIT 6 • 3 WEEKS

Saving & Investing Basics

Build emergency funds, understand investments, and harness compound growth

💰 The Power of Starting Early

Time is your greatest asset when investing. Thanks to compound interest, money invested early has exponentially more time to grow than money invested later.

The Early Starter vs. Late Starter

See the dramatic difference starting early makes:

Scenario 1: Start at Age 25

Invest $200/month from age 25-65 (40 years) at 8% annual return

Final Amount: $622,510

Total Invested: $96,000

Scenario 2: Start at Age 35

Invest $200/month from age 35-65 (30 years) at 8% annual return

Final Amount: $298,071

Total Invested: $72,000

💡 The Difference: $324,439!

Starting just 10 years earlier resulted in more than DOUBLE the final amount, despite only $24,000 more invested. That's the power of compound interest!

🎯 Types of Investments

📊 Stocks

Ownership shares in companies. Higher potential returns but more volatile.

Average Return: 10% annually (historical)

High Risk

🏛️ Bonds

Loans to companies or government. Stable income with lower returns.

Average Return: 4-6% annually

Low Risk

🎯 Index Funds

Diversified baskets of stocks tracking market indices (S&P 500).

Average Return: 8-10% annually

Medium Risk

🏠 Real Estate

Property ownership or REITs. Provides income and appreciation.

Average Return: 8-12% annually

Medium Risk

📱 ETFs

Exchange-traded funds that trade like stocks but hold many assets.

Average Return: Varies by fund

Medium Risk

🔐 401(k) / IRA

Tax-advantaged retirement accounts. Often with employer matching.

Benefit: Tax savings + free money from employer

Account Type

🚨 Emergency Fund First!

Before Investing, Build Your Safety Net

An emergency fund protects you from going into debt when unexpected expenses arise. Save 3-6 months of living expenses in a high-yield savings account.

  • Start Small: Begin with $1,000, then build to 1 month of expenses
  • Keep it Accessible: High-yield savings account, not invested
  • Don't Touch It: Only for true emergencies (job loss, medical, car repair)
  • Automate It: Set up automatic transfers each payday

📚 Investment Principles

1. Diversification

Don't put all eggs in one basket. Spread investments across different asset classes, industries, and geographies to reduce risk.

2. Time in the Market > Timing the Market

Stay invested long-term. Don't try to predict market highs and lows. Consistent investing over decades builds wealth.

3. Dollar-Cost Averaging

Invest the same amount regularly (monthly) regardless of market conditions. This reduces the impact of market volatility.

4. Invest for the Long Term

Think decades, not days. The stock market has ups and downs, but historically trends upward over 10+ year periods.

✅ Investment Action Steps