Your AI Roadmap

CHAPTER 11Your Money's Making Money: Saving vs. Investing

Now that you know more about your money in a one-year time span, let's talk about your money over a longer time span. Let's talk about saving and investing. Great news! The phrase “your money's making money” is real. While writing this book over a few months, my investments made thousands without me having to lift a finger! Does that sound interesting to you? In this chapter, we'll look at savings, investing, and my advice to have a diversified financial portfolio.

When I was a kid, I heard advice like “Make sure to save money from that paycheck” and “Be sure to save” and “Don't spend it all.” While the people who said these words might have meant well, they are pretty abstract. What does “Don't spend it all” actually mean? What do you do with the money? Therefore, this book is far more concrete with tons of specifics! When I got an early reader in her 20s to review this book, she told me she skipped this chapter since her dad taught her about stocks when she was 13 years old. Lucky her! If you're more like me and didn't get this type of education before, or simply want to see some cool money data, then let's dive into the chapter.

Investing Is Better Than Saving

Let's clarify these terms. Saving money means storing it, typically with a low chance of losing it. Investing money comes with higher risk, but also higher reward.¹ If you are risk averse, you might think “Oh no, I would never want to invest my money—that ...