Don Dillon is a 24-year-old graphic designer. He eventually wants to get married, raise a family, and buy a house. He knows that he has to start putting money away so that his goals can someday become a reality. He has heard that investing is risky because you can lose money as well as make money. So Don decides to play it safe and deposit money in a bank on a regular basis. Why might this not be his best strategy?
A) Stock investments will always result in high returns.
B) It pays to take chances with your money.
C) You can actually lose money with bank savings due to inflation and taxes.
D) People usually benefit from risky investments.
E) Most savings accounts are insured by the CDIC.

Question

Quizplus · Accepted Answer

While it is true that stock investments can result in high returns and taking risks can pay off, depositing money in a bank may not be the best strategy because savings accounts typically have lower interest rates than other investment options. Additionally, the interest earned on savings accounts may not keep up with inflation and taxes, resulting in a loss of purchasing power over time. In order to achieve his long-term goals of getting married, raising a family, and buying a house, Don may need to consider other investment options that offer a higher potential for returns, such as stocks, bonds, or mutual funds.

Don Dillon Is a 24-Year-Old Graphic Designer