Investing vs.Saving

What's the difference?  Investing uses money to potentially create more money; saving generally stores money away. Whether a person prefers to invest or to save often depends on his or her tolerance for risk.

Many think of saving as the "safe" way to go. But investing carries its own range of safe to risky choices — with bonds and money market accounts at the more conservative end and equities (stocks) at the more risky end. In addition to risk tolerance, the decision to save or to invest also depends upon other factors, including your time horizon and goals.

Savers are generally more concerned with maintaining the amount they put into an account, i.e., their principal, rather than its potential for generating more income. Saving via low risk vehicles with moderate returns, such as money market funds, a type of mutual fund, offers more liquidity and may be considered more suitable for meeting short-term savings goals.*

On the other hand, investors are generally more willing to risk their principal investment, for the potential of higher returns. Investments, such as stocks, bonds and mutual funds, will fluctuate in value. Strategies, such as diversification, don't ensure specific returns but can help manage the risks of investing. By spreading your money among different types of assets, such as equity and fixed-income investments, you can strive for a comfortable balance of risk and return potential that will meet your needs.**

Rather than choosing one approach or the other, consider combining them. Then you can blend the relative stability of saving with the accumulation potential of investing, as your individual needs dictate.

* TIAA-CREF Money Market Fund, as in other funds, is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other U.S. government agency. Although the Money Market Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. (The current yield more closely reflects the fund's current earnings than does the total return. Past performance is not indicative of future yields, which will fluctuate.)
** Diversification does not guarantee against losses.
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