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You crawl before you walk. You walk before you run. You run before you drive a car. Investing should be approached in the same manner. You begin slowly with small amounts of money and very low risk. With time, both the size of your investments and the risks can increase.

Crawling: Savings

Some people don't think of savings as an investment. Anything that brings you a return on your money is an investment. In fact you could lose money and it would still be called an investment.

You can open a savings account at a local bank or credit union. There may be a very low minimum deposit. For higher rates, you can search for online banks such as Ing Direct. If you have a job, you can have your paycheck automatically deposited to your checking account and direct part of that check to your savings account.

The next level up is a Money Market account. The interest on these accounts is usually higher than savings. You can make deposits and withdrawals as easily as with a traditional savings account.

Certificates of Deposit (CDs) are another savings vehicle. These accounts are different from the preceding types because access to your money is limited. You invest a certain amount of money in a CD for a certain time. Another difference in CDs is that there may be a minimum deposit. Essentially, the more money you invest and the longer the timeframe (from three months to five years or more), the higher the interest. With CDs, there is a steep penalty for early withdrawal.

What all of these savings modalities have in common is zero risk.

Walking: U.S. Treasury Bills, Notes & Bonds

These vehicles are essentially a more sophisticated form of saving. Like a saving account, interest is paid on all of these investments. They are as safe as savings accounts, money market funds, or CDs. They are also risk-free. Some of these savings vehicles are not as attractive as they once were, nor are they as risk-free. Even the forms of savings mentioned at the beginning are not that attractive today. With interest rates as low as they are, you will actually lose money in most of these vehicles because inflation is so much higher than your return.

In brief, savings bonds and notes have a fixed interest return paid every six months until they mature. Notes mature in two to 10 years and bills in a year or less. For these, there are minimum investments, $1,000 for a bill or note and $25 for a bond.

Like a CD, these instruments lock your money in for a specified time.

Running: Mutual Funds, Exchange Traded

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