California Department of Business Oversight  

Toll-Free 1-866-275-2677


3-6 months of living 


  CDs or money market 


  US Treasury Bills
















In most cases, the younger y

ou are, the more you want to f


on long-term growth by inv

esting in stock and stock funds



If you have to tap your emer

gency fund, 

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


emergency ends so you can dr

aw 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’

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.

If you’re feeling financially 

stressed—which can happen when


you’re juggling work, education,


and family responsibilities—


saving and investing may be the


last things on your mind. Yet both


are essential to your financial


security and the security of the


people who depend on you. And


getting started doesn’t require a


big commitment of money or time.


Financial emergencies have a


nasty way of cropping up at incon


venient times: Your car needs a


major repair, the refrigerator dies,


or, worse yet, you or your spouse is


out of work for several months and


you need money to cover the mort


gage or other regular expenses.


Other unexpected events—

even pleasant ones, such as your parents’


anniversary party or a chance for your children to


go to a sports or music camp—can foul up your


spending plan. 

Of course, you could put some of these


expenses on a credit card. But you risk increasing


these costs significantly if you pay off the bills


over an extended period. And, in the worst cases,


the expense may put you over your line of credit.


The better solution is to build an emergency


fund—sometimes called a rainy-day fund—by


saving a regular amount from each paycheck until


you hit your target. As a rule, your emergency


fund should provide a minimum of three to


six months of living expenses in easily accessible


accounts, such as certificates of deposit (CDs),


13-week US Treasury bills, and money market



Easily accessible accounts are liquid, which


means you can sell or redeem them quickly for


cash with little or no loss of value. In addition to


being liquid, these accounts are either federally


insured or, in the case of Treasury bills, backed


by the government’s promise to repay


With CDs, you can use a technique called


laddering. Instead of putting your entire emer


gency fund in one CD, you can split the money


among three or four one-year CDs that mature at


regular intervals during the year

. The staggered 

maturity dates reduce the risk of having to take


an early withdrawal. If there’

s no emergency, you 

can roll the CD over for another term.



Once you have an emergency fund, saving can also


help you meet short-term goals, such as the down


payment on a new car or the money to pay for a


family vacation. Saving is all about putting away a


regular amount on a regular basis. Sure, you may


earn some interest, but what really builds your


account value is regular cash infusions.


Saving and Investing

Putting money aside can help meet emergencies and long-term goals.












helps the newest generation of veterans make a smooth  
transition to civilian life. The handbook explains the 
benefits that make higher education and home ownership 
accessible and discusses the practical aspects of finding a job,  
managing money, and investing for the future. Written in 
clear language with colorful illustrations, the Handbook also 
lists the resources veterans can trust for reliable information.

Lightbulb Press, Inc.    Phone: 212-485-8800