by 
The Curious Bag
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Americans invest to create wealth. However, the infinite number of investment products can be daunting to the novice, because no "one size fits all" program exists for investors.
Functions
Investments work by giving something up now to reap financial rewards later. The purpose is to increase purchasing power over the rate of inflation.
Time Frame
Savers provide time frames for their lifestyle goals to serve as motivation. For example, you may wish to retire to a Florida beachfront community within 20 years.
Considerations
The rate of inflation can be a factor in investment decisions. Bureau of Labor Statistics' Consumer Price Index data pegs historical U.S. inflation at 3 percent annually. Rising price levels erode purchasing power over time.
Misconceptions
Long-term compounding can build large savings from relatively small monthly sums. For example, $100 monthly investments that return 5 percent annually translate into $83,572 over 30 years. In comparison, one lump-sum $10,000 investment earning the same 5 percent grows to $43,219 in 30 years.
Warning
Match investment decisions with your financial goals and risk tolerance. If you don't have time to conduct adequate research, consider hiring an investment adviser.
Source:
SEC: Check out Brokers and Advisers
SEC: Broker - Dealer Registration
More Information:
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