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RealMoney101www.hesaa.org14MoreonInvestingSavingCollegestudentsandrecentgraduatesaceparticularchal-lengesinsavingandplanningorretirement.Savingearlyandcapitalizingonyearsocompoundinginterestiskeytoretiringcomortably.Themostimportantthingtorememberisthatyouwillretiresomeday.Youngerstudentsshouldbemoreocusedonbuildingupacashreservethanputtingmoneyinaretire-mentaccount.Thiswillprovidethemwithanemergencyundwhichcanbeusedorincidentalexpensesorasasavingsac-countoraneventualdownpaymentonahome.SocialSecurityisanothercomponentoretirementthatstudentsshouldbecomeamiliarwithearlyon.SocialSecuritypaymentsarebasedontheaverageothe35yearswhenyouhavethemostreportedearnings.CurrentstudentscanexpecttoclaimullSocialSecuritybenetsatage67althoughpartialbenetsbecomeavailableatage62.SocialSecurityhoweverwillnotensureacomort-ableretirementbyitsel.Companyprovided401kplanso-tenhavethebenetoacompanymatchwhichcanincreaseretire-mentundsdramaticallyovertime.Forthosewhodonthaveaccesstoa401kanindividualretirementaccountIRAallowssaverstotakeadvantageocompoundinterest.SavershavetheoptionoatraditionalIRAinwhichcontributionsarenttaxeduntilyouwithdrawthemduringretirementoraRothIRAinwhichundsaretaxedbeorebeingaddedtoyoursavingsbutthewithdrawalsarenottaxed.TheRothIRAisaparticularlyadvan-tageousoptionoryoungsaverswhoarelikelyinalowertaxbracketthantheywillbeuponretirementseepage4and5ormoreinormationontaxbrackets.Determiningyourinvestmentapproach-orinotherwordsdis-coveringwhattypeoinvestoryouare-canhelpyouchoosetherightinvestmentmix.Therearemultipleactorstoconsiderincludingyourtimehorizonrisktoleranceandnancialsitua-tion.InvestmentsovertimeThechartontheollowingpagede-pictsourdierentinvestmenttypes.Thereturnsonstockscanfuctuategreatlyovertime.Yethistoricallystockshaveoutper-ormedbondsandshort-terminvest-mentsandhavegreatlyosetthee-ectsoinfation.Thelongeryouhavetoinvestthebetterequippedyouaretorideoutshort-termfuctuationsinthestockmarketandthemoreag-gressiveyourinvestmentstrategycanbe.Butiyourenearingretirementyoumayneedmoreothesecuritythatbondsandshort-terminvestmentscanbring.YourrisktoleranceBeoredecidingonyourrisktoleranceleveltherearetwotypesorisktothinkabouttheriskthataninvestmentwillnotgeneratethereturnyoudhopedorinvestmentriskandtheriskthatinfationwilleatawayatthevalueoyoursavingsinfa-tionrisk.Stockstendtoinvolvegreaterinvestmentriskandlessinfationrisk.Bondsandshort-terminvestmentsoerlessinvestmentriskbutgreaterinfationrisk.Ultimatelyyourcomortlevelwitheachtypeoriskwillhelpdeterminewhichinvestmentmixisrightoryou.FinancialInvestments