You also need to weigh an investment's risk.
Generally, the more risk involved with an investment, the higher its
potential return.
Consequently, if you are willing to take on more risk, then more potential
will exist for your savings to grow over the long term.
As a general rule, short-term investments, such as money market funds,
offer the least risk. Fixed-income investments offer potentially higher
returns with added risk. Stock investments offer the highest potential
returns with the greatest amount of risk.
A combination of money market, fixed-income, and stock investments
can provide potentially higher returns than either money market or fixed-income
investments alone, with only slightly greater risk.
