8 Basics That Beginning Investors Must Know

New investors fall into some common traps. But you can often avoid them if you understand and remember these fundamentals.

1. Savings erode if you’re not investing

InflationBartolomiej Pietrzyk / Shutterstock.com

If your money isn’t growing, it is losing purchasing power to inflation, the rising of prices over time. For instance, you’d need $290.88 in October 2017 to buy the same stuff you could get for $100 in October 1980, according to the U.S. Bureau of Labor Statistics’ inflation calculator.

The Federal Reserve has a goal of maintaining a 2 percent inflation rate. If the Fed is successful, your savings must earn a minimum of 2 percent a year just to retain its full value over time.

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