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.
