In most cases, the younger you are, the more you want to focus 

on long-term growth by investing in stock and stock funds.


If you have to tap your emergency fund, 

it’s best to start rebuilding it as soon as the 

emergency ends so you can draw on the 

fund again if the need arises.

To support a savings habit, it often helps to 

arrange for a direct transfer periodically from 

your checking to your savings account. That way, 

you won’t be so tempted to spend the cash.


Like saving, investing helps protect your  

financial security. But it differs from saving in  

two significant ways:
1.   Most investments are not federally insured  

and can lose value, which means you take a 

certain amount of risk in investing that you 

don’t take when you save.

2.   Over time investments as a whole, though not 

every individual investment, have provided a 

stronger return than savings. While there’s no 

guarantee that history will repeat itself, it’s 

reasonable to assume that investing, if done 

judiciously, can make the difference between 

just getting by and meeting your goals. 

Investing also requires 

learning enough about 

various types of invest-

ments—basically stocks, 

bonds, and the mutual funds 

and exchange traded funds 

(ETFs) that invest in stocks and 

bonds—to make informed choices. 

Stocks and stock funds are 

equity investments, which 

means you buy an ownership 

share when you invest. You may 

earn dividend income on stock 

investments and, if the price 

increases, you may decide to 

sell at a profit. But stock prices 

aren’t fixed and can go down  

as well as up. 

Bonds have a fixed price if 

you buy at issue and hold until 

maturity, and they pay interest 

income, usually at a fixed rate. 

But the prices change during 

the term, so if you sell before 

maturity, you may sell for more 

or less than you paid to buy.

With any investment, if you 

sell when the price is less than you paid, you’ll 

lock in a loss. 


The best approach to investing is to learn  

as you go. A number of websites, including and some state regulators’ 

websites, offer clear, unbiased information about 

investing and provide links to other resources. 

Also, find out if your credit union or bank pro-

vides investor seminars, and check to see if local 

schools or libraries offer introductory courses on 

investing. Be cautious, though, of seminars that 

are really fronts for selling specific investments.


MutuaL funDs &  

exCHange traDeD funDs



veterans HanDBOOK