High school students need to understand the importance of saving and investing. Saving is the part of your income that you do not spend and that you set aside for future use. People save for many different reasons. You can save to purchase a car, a home, a college education, for retirement, or for a vacation. Your savings are impacted by interest rates and time.
You invest when you use your savings to buy financial assets, like stocks, bonds and mutual funds, to increase your income or your wealth in the future. Investments are subject to different levels of risk and expected rates of return. Investments with high rates of return have higher levels of risk. And investments with low levels of risk have lower rates of return. Diversification of your investment among a number of different types of investment products can lower your investment risks.