Should I save or invest? | How to start investing in stocks

One of the most common questions when starting a financial plan is: “Should I save first, or should I invest?” There is no absolute answer, but your current financial situation clearly determines the order of priority. According to Investopedia, beginning to invest without an emergency fund in place can be risky. A general recommendation is to save three to six months’ worth of living expenses first, and then transition your surplus funds into investments.

Savings accounts generally offer near-guaranteed principal protection, but with annual interest rates typically below 2%, they often fail to outpace inflation. In contrast, stocks or mutual funds may offer average annual returns of 6% to 10%, though they always carry the possibility of losing your principal. Therefore, the decision isn’t about “which gives more return,” but “which aligns best with your financial readiness and purpose.”

When people ask me whether it's time to invest, I often say: “If you lost your job tomorrow, could you survive more than three months with your savings?” If the answer is yes, then you’re likely ready to consider investing. Without a solid financial base, investing is like building a castle on sand. Saving comes first because it determines whether you're truly prepared to take on investment risk.

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How to start investing in stocks

Stock investing begins by overcoming the fear that stems from not knowing enough. According to U.S. Bank, the first step to investing is to set clear goals. Are you aiming for short-term gains or long-term retirement planning? Your goals will define your asset choices, your risk tolerance, and your investing strategy.

The next step is opening an investment account. In the U.S., this typically means a brokerage account; in Korea, it could be a standard securities account or an ISA. Once the account is set up, beginners are encouraged to start with diversified products like ETFs rather than picking individual stocks. Instead of going all in on a single stock like Samsung Electronics, a safer starting point might be a KOSPI 200 ETF or an S&P 500 ETF.

You don’t need to start with a large amount of money. Even investing $100 per month can help you develop the sense of “moving with the market.” What matters most is staying in the game, not winning it overnight. Stock investing isn’t a sprint — it’s a marathon requiring patience, education, and consistent strategy.

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How to choose between high‑yield account and CD?

Before jumping into investments, many people wonder where to place their short-term funds. High-yield savings accounts and certificates of deposit (CDs) are two common options for emergency or short-term funds. Investopedia outlines the differences clearly: high-yield savings accounts offer flexible access and variable interest rates, while CDs offer fixed returns but come with early withdrawal penalties.

For instance, if a CD offers an annual interest rate of 4.5% over 12 months, it provides a predictable return. Meanwhile, a high-yield savings account may fluctuate with market rates but gives you full access to your funds at any time. Your choice depends entirely on whether you plan to use the money soon or let it sit untouched.

If you're confident you won’t need the money for a set period, a CD might be the better choice. If there’s any chance you might need it, the flexibility of a high-yield savings account is safer. These two tools are not competitors; they serve different purposes. In personal finance, it’s not about which option is better — it’s about which suits your purpose better.

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Key Takeaways

First, the order between saving and investing depends on your financial readiness. Investing without an emergency fund is like driving on a highway without car insurance. Secure the basics first, then move into investing with your surplus income.

Second, you don’t need to be an expert to begin stock investing. What matters is that you start and stay consistent. Investing through ETFs, long-term index strategies, and auto-transfer methods can grow your wealth effectively over time. Even small amounts provide valuable learning and help build confidence.

Third, high-yield savings accounts and CDs form the foundation of short-term financial planning. If liquidity is your priority, go with the savings account. If you want guaranteed returns, choose a CD. It’s not about better or worse — it’s about fitting the right tool to the right financial goal.

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Success Quotes

“Risk comes from not knowing what you're doing.” — Warren Buffett

Until my mid-30s, I was indifferent to personal finance. I believed, “Keeping money in the bank is safest,” and I parked all my assets in savings. One day, a friend said, “People who only save are losing to inflation little by little every day.” That hit me like a wake-up call.

After that, I began learning. I studied stock basics, economic trends, and investor psychology. I began making small investments — cautiously but consciously. The more I learned, the more I realized risk wasn’t the enemy; ignorance was. Just as Buffett said, the moment I understood what I was doing, the game shifted from fear to strategy. Now, both my savings and investments are managed by choice — not by chance. And you can do the same, starting today.

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