If you’re in my college-age target audience, you might not be making much and you probably don’t want to think about the R word (Retirement) when your career has barely started yet. Saving money is still a good idea. But it’s about more than just having cash in the bank.

Those same low interest rates that make home and car loans more affordable also mean that your basic savings account or certificate of deposit (CD) is earning less than one percent. With the rate of inflation averaging three percent, you might as well shove your cash under a mattress for all the good “saving money” will do for you when it comes to retirement. My only firm non-professional’s advice on saving and investing for the future is simply this: do it! What follows are some points for consideration.

The Magic of Compound Interest

The earlier you start saving, the longer your money has an opportunity to accumulate. And while interest rates are awful right now (see above), banks still offer them as an incentive for you to deposit your money with them. And by deposit I mean opening an account, not placing money in a safe deposit box. The latter is nice but isn’t doing anything at all. You want your money to work for you, so at the very least you need a savings account of some sort that provides interest–ideally more interest than service charges.

The Speed of Money

In my mind, there are three speeds of money: immediate, near-term, and long-term.

Immediate money is the money you keep in your checking account to pay bills day to day or week to week.

Near-term money is your savings account, which covers things like emergencies, slow work periods, large purchases, and vacations. It’s still cash and relatively liquid (easily spendable).

Long-term money is where things get more complicated because there are more options, but that’s the money you hold onto until you’re ready to stop working…ideally because you want to, not because you have to.

You’ve got plans for the future, or you wouldn’t be going to college, right? What does that future involve–spouse, kids, home, car, travel? All of those things cost money. And then there’s that whole R-word thing. Eventually you’ll need some way to pay the bills when you’re not able to work. Most of what I’ll be sharing today will be options for near-term or long-term money.

Options

401(k)

This is a nice investment option to have, if you can get it (I was in my 30s before I had a job that offered one). A 401(k) is an employer-sponsored investment opportunity that allows you to invest pre-tax money in stocks, mutual funds, gold, or whatever the employer’s investment company offers. “Pre-tax” means that the money is subtracted from your income so that income taxes are assessed on the remaining amount. Taxes are paid once you start withdrawing from the account. Employers often offer matching funds up to a certain percentage or dollar amount, meaning whatever you put in, they’ll match it up to that amount. Usually there’s a range of investment levels, from 1 to 20% of your salary, with the employer matching up to X% (the ones I had usually matched to 3%).

401(k)s are useful in that you can roll over the amount of money you accumulate in one company’s account into another’s. However, the exact investments within the account will change if the new employer’s 401(k) program is run by a different investment house. What usually happens is that when you get set up in your new employer’s 401(k) program you call up the previous employer’s investment house and ask them to close out the account so you can roll it over to the next one. For gosh sakes, don’t just ask them to close it out and send you a check! Otherwise they’ll treat the transaction as a withdrawal you’ll take a big tax hit (and some investment house penalties) for closing the account early–meaning before you turn 65. There are no taxes charged on a rollover. If you had a 401(k) with your previous employer and the new employer doesn’t have one, keep the account open–you can continue to contribute to it on your own. The investment house (Merrill Lynch, Edward Jones, etc.) is responsible for maintaining the account, not the employer.

Individual Retirement Account (IRA)

This is something you can get without an employer sponsoring it. Like a 401(k), the money in the account can be applied to a variety of investment options–stocks, equities, bonds, etc. (more on those later)–and that money is allowed to accumulate until you reach 65 years of age, at which point you have to start withdrawing. Like the 401(k), a traditional IRA is funded with pre-tax dollars and the taxes are paid once you start withdrawing from the account. There’s also a Roth IRA, where you put money into the account after taxes so that the money is not taxed when you’re older. Are taxes going to be higher or lower when you’re 65? Place your bets. Or hedge your bets and open one of each.

Stocks

You can always go to an investment house and purchase stocks individually on your own. Stocks are an opportunity to own a piece of a company–if the company makes a profit, it rewards its investors with dividends (note: you will be taxed on these at the end of the year). This requires a bit more skill because you have to do the research and still guess which stock or stocks will grow in value the most. The trick is to be able to handle a lot of volatility. Some folks do day trading, where they constantly buy and sell stocks on the same day, hoping to make quick profits on sudden changes in particular stock values. I am not nearly smart enough to do this sort of thing. The one thing I’d advise against is buying only one stock and placing all your faith in that as an investment.

Mutual Funds

These are large funds that can contain shares in dozens or hundreds of different companies, as well as bonds and other types of investments based on a certain expected rate of return. Mutual funds can be included in an IRA or 401(k) or not. If they aren’t, you can withdraw money from them without pre-retirement penalties. Like stocks, if you receive dividends or the value of your fund has gone up between purchase and sale–and you’d better hope it does, or you need to change funds–you will have to pay taxes on the sale.

Bonds

There are multiple flavors of bonds, but many of them are the government equivalent of stocks: you’re contributing money to a national, state, or municipality for its operations in return for (usually) a set amount of return. Bonds are considered more stable or reliable investments than stocks because they’re backed by a government–you expect to get paid. The higher the rating on the bond (AAA being the best), the more reliable the investment. Of course if they’re stable in value, that means they’re not growing that much, either.

Other Options

There are something like 100,000 different funds out there, focusing on everything from precious metals (platinum, gold, silver) to mutual funds that specialize in stocks that meet specific political criteria. If you’re seriously interested in what’s out there, start reading The Wall Street Journal, Forbes, or CNN Money—your head might start spinning.

General Advice

Commit to Saving

Start investing for your near-term and long-term savings as soon as it’s feasible, and then consider that money untouchable until you really need it or until you’re old enough to retire. My preferred near-term cash savings (the “rainy day fund”) should be equivalent to six or more months’s salary. Thanks to part-time work I managed to make my six-month rainy day fund last 9 before it finally ran out. Fortunately other work came in just in the nick of time. The trick–especially for freelancers–is to be socking away as much “rainy day” money as you can to handle stretches when no work is coming in.

When I can make it work, I try to shoot for saving 10 percent of my income for retirement. You might have laughed at that, especially if you’re not making much as it is. Note, again, that these are my preferences–your mileage can and will vary.

Talk to a Professional

I’ve been as vague as possible here because the only advice I want to offer here is that you should invest for your retirement. How you invest should be up to you. Investment houses have agents who are paid to help people meet their financial goals–usually with an eye toward the long term. Go out and do the research yourself, by all means. You should have some idea of what you’re getting yourself into; but there’s no shame in talking to a professional investment/financial advisor. And if you’re in your 30s or 40s (or even 50s!) and still don’t have “a plan,” it’s worth talking to someone about getting one together. As a freelancer I now lack access to an employer-based investment house, so I sought them elsewhere (one nonprofit I found through my church and one for-profit house who was presenting at a neighborhood street fair).

Know Your Risk Posture

This is a big thing for financial advisors to know: how much risk are you willing to accept if the potential reward is also high? Are you willing to lose $X,000 if the gain is 3X,—? This will affect the types of investments they’ll steer you toward acquiring. The young and fearless usually can afford to go for more “aggressive” investments, such as funds that specialize in international markets that might not be as stable or reliable as the U.S. Then again, you might like or want stable growth. You know what you will put up with, and if the constant peaks and valleys of the stock market make you nervous, well…you know your attitude toward risk, don’t you?

Diversify!

A financial analyst will tell you this, too. There are different types of investments to meet differing needs: income growth, steady/reliable income, short-term holdings, long-term holdings, etc. The different options can be used to support near-term or long-term needs. Different investment options offer advantages depending on how much money you have to play with, how close to retirement you are, and how volatile the markets are. Generally, the closer you get to retirement, the more reliable/stable your investments get because now you need to depend on that money to pay the bills instead of money from a job.

Take Care of Your Family

Most of this content was written for the single person, but the options become more important if you have a spouse or kids. I didn’t mention life insurance up to now, but that’s worth considering as income replacement for your family if you don’t quite make it to retirement. Another thing to consider to keep the state or relatives fighting over your assets after your demise is to set up a will or trust with specific instructions about what to do with your money and how to pay for everything. I’m terrible at taking this advice because I’m single, but a will is much more important for people who have others (even pets) depending on them.

Believe in the Long-Term Health and Growth of the U.S. Economy

Since I was born, there have been five or six big economic burps that negatively impacted investments at the time. Recoveries still happen. There’s an axiom in the investment world that you “buy low, sell high.” That means if you’re able to think long-term and you believe that the economy can and will recover, you keep buying stocks, funds, or whatever, under the assumption that the current crisis will not last forever. In some ways, we’re still reeling from the 2008 housing bubble crash, but the stock market has been at all-time highs. New businesses keep forming but so do government bureaucracies. Whom do you believe? Investing for the long term still means seeking out items that you believe will have the same or better value in the future because people want and need them. I cannot speak for economies elsewhere, but that sort of optimism keeps the size of the U.S. economy valued at something like $14 trillion. And until the point where I retire, I’ll keep buying. So should you.