Looking at the period from 1928 to 2013, we see that investing money in the stock market has historically rewarded investors with average returns that exceed 11%. Even from 2004 to 2013—the decade that includes the most recent economic recession—investors earned approximately 9% on average.

So why would you put money in a bank savings account that might earn 0.1% to 2% instead? Because investing money always involves some amount of risk—the potential to lose money as well as the potential to make money.

Financial analysts make forecasts based on what happened in the past. But they include the disclaimer “Past performance does not guarantee future results.” In other words, even the smartest analyst can’t predict how much an investment will be worth in the future. Therefore, it’s very important to invest with wisdom and caution.

The purpose of investing money is to increase your wealth over a long time period so you can achieve goals like paying for retirement or purchasing a home. Whether you should save or invest depends on your time horizon, which is the amount of time between now and when you’ll actually need to spend the money. If you have a long time horizon—such as 10 years or more—investing makes sense. When you have a short time horizon—such as a year or less—many financial advisors recommend that you stick with an insured savings account.

Investments, or securities, are not guaranteed by any federal agency such as the FDIC. There is no insurance against losing money in an investment. However, the Securities Investor Protection Corporation (SIPC) is a nongovernment entity that gives you limited protection in certain situations. They step in when an investment brokerage firm fails or fraud is the cause of investor loss. The SIPC replaces missing securities up to $500,000 per customer. You can learn more at sipc.org.