Getting started
Save for something big
Make it a reality
When you have more than a few years on your side, investing — rather than saving — for a goal might be the path to success. The market’s potential for higher long-term returns could mean you need to set aside less to meet your goal than if you put your money into a savings account or CD. Keep in mind, however, that there is additional risk with investing and, unlike many bank products, your money is not insured and you can lose money.
Check your calendar
Some goals, like paying for a child’s college education, have a specific deadline. Others, such as the resources to start your own business, may be more flexible. How much time you have before you’ll need your money will play a big role in identifying your best investment strategy, as well as how much risk is right for you.
Update your goal
Because life changes, it’s a good idea to periodically reassess your goal. A shift in what your goal looks like, such as deciding to add an extension on your home rather than just remodeling the kitchen, could create a gap between what you have and what you’ll need. Or, you could discover that you’ll reach your goal sooner than you thought.
Take advantage of tax-advantaged
If you’re investing to pay for a child’s college education and related expenses, look into tax-advantaged 529 college savings plans. (Tax-advantaged treatment applies to savings used for qualified education expenses. State tax treatment varies.) A Coverdell Education Savings Account is another tax-advantaged option that might make sense for your investing strategy.
There’s more than one way to reach your goal
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Growth and income
These funds typically invest in dividend-paying companies with good earnings prospects. Reinvested dividend income can provide a secondary source of investment growth.
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Equity income
These funds seek to increase your wealth over the long term by primarily investing in well-established, dividend-paying companies, as well as bonds and other fixed income investments.
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Balanced
These funds take a balanced approach to growth and income by investing across a mix of quality stocks and bonds. If your time horizon is just a few years, this is an investment option to consider.
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Stay on track
Sometimes it’s challenging to stick to your plan, particularly when facing well-meaning — but off-target — advice.
Is a big change ahead?
Get in financial shape before you change your career or lifestyle.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
This material does not constitute legal or tax advice. Investors should consult with their legal or tax advisors.
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American Funds Distributors, Inc.
This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.