Lesson 8 - Investing
Why investing matters. Investing is an effective way to put your money to work and potentially build wealth. Smart investing may allow your money to outpace inflation and increase in value. The greater growth potential of investing is primarily due to the power of compounding and the risk-return tradeoff.
The power of compounding
The table below shows you how a single investment of $1200 ($100 a month) will grow at various rates of return. Two percent is about what you might get from a certificate of deposit (CD) or with a government bond over time, 9% is about the historical average stock market return.