Question

Choose all that apply. Select the differences between saving and investing. Investing is riskier, but has the potential for a higher rate of return. Savings accounts are not federally insured. Some investments earn dividends. Savings accounts earn interest. To collect money from an investment, it is necessary to sell the investment.

Answer 1

Investing is riskier, but has the potential for a higher rate of return.

Step-by-step explanation:

Savings is the action of putting money aside for future use. An individual saves when they have money that they do not have an immediate use for, or to accumulate funds for a set objective. Saving is risk-free as the money is simply kept aside in a secure place, preferably a bank account.

Investing is engaging in commercial activities to generate wealth. It involves making decisions on activities that result in profits. However, there are chances that the selected activities might result in losses rather than profits as intended. Activities that present higher chances of profits bear higher chances of big losses.

Saving is risk-free as the probability of losing money is minimal compared to investing, which offers chances of profits, but losses are possible.