The savings for a short-term goal will earn more interest than investments in a long-term goal such as a retirement plan.

Question

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Investments in a long-term goal such as a retirement plan typically earn more interest over time due to compound interest and the effects of compounding over a longer period. Short-term savings goals usually earn relatively lower interest rates, and the funds are also more accessible, meaning they are less likely to be locked up in long-term investments that can generate higher returns.

The Savings for a Short-Term Goal Will Earn More Interest