Investments

Once your students have established a savings habit and are paying off debt, they can start thinking about setting up investments.

However, one size does not fit all when it comes to investments. It all depends on what the goal is for the savings and when the money will be needed.

For example, if one of your students is saving for retirement 40 years from now (assuming retirement age of 65), he or she can make investments that have higher risk because there probably is more time to regain any losses incurred if the investment goes down in value. Such investments might be in individual stocks or in mutual funds that invest in stocks.

If another of your students is only 15 years away from retirement, he or she may be better served by investing in less risky investments such as bonds, more conservative mutual funds, or money market accounts. However, less risk means lower returns. If your student puts all his or her money into a savings account, while it’s very safe, the small rate of return may not even keep up with inflation and taxes. Help your students find a happy medium and encourage them to learn more about investments from a variety of reputable sources.