4. Decide whether to save or invest
Now that you know your goal and time horizon, decide whether you want to simply save or invest your money.
The choice between saving and investing depends largely on your risk tolerance, the time horizon for the goal, and capacity for loss.
While saving offers more security, investing typically yields better returns over time, as investments have the potential for higher growth, particularly over long-term periods.
For more insights on this, see our guide to
saving v investing.
If your time horizon is short (under 5 years) or you want low risk, keeping your money in a high-yield savings account other savings product may be best.
If you have a longer time horizon (5+ years) and can tolerate more risk, investing in stocks, bonds, or mutual funds could help you achieve higher returns.