MYTH BUSTERS
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true or false?

Saving and investing are really the same, right? Wrong! This common misconception often plays a big role in keeping people from reaching their financial goals. Take this brief true/false quiz to see how well you understand the difference.

Spending a few extra dollars each month won't really matter.

FALSE.

Do you catch yourself saying: "I won’t miss an extra $5 here, or $10 there." Depending on your age, this could be a huge mistake. One of the cornerstones of saving is understanding the time value of money. Keep in mind, $10 today is more valuable than $10 a year from now.

Investing should always come first because it has a larger potential reward.

FALSE.

Saving always comes first. It’s the foundation upon which your financial house is built. The reason is simple – unless you inherit a large chunk of cash, your savings will provide the capital to feed your investments.

I pay myself first each pay period, so I don’t need to invest.

FALSE.

Even if you’re saving each month, you should also be investing within your budget. Investing takes saving a step further. Investing is the way that you will begin to potentially grow your money and build long-term wealth.

My investments are doing well, so I don’t need an emergency fund.

FALSE.

As you begin to build wealth, it’s even more important to spread your risk. That includes having money in an emergency fund that is not invested. It needs to be easily available without taking a big penalty for accessing it. A money market account at your bank is a safe place to put this.

Investing is the best way to earn large amounts of cash quickly to make a down payment on a new home.

FALSE.

You buy stocks for the long-term, not a quick turnaround. Anything that you will need to use in five years or less should be savings driven. More appropriate short-term savings vehicles are Certificates of Deposit or Money Market Funds.