There are savers and there are investors. Those who don’t know how to invest or are afraid to take financial risks save money and put it in the bank. People who learn to invest know the basics of investing and know that they have a lot of freedom to tailor their investments to their risk tolerance.

Savers take risks they are not even aware of. Inflation and taxes can eat up interest earnings, leaving them with a smaller nest egg than they expected in retirement. For example, $100,000 at 4% interest yields $4,000 in interest earnings per year. Income taxes in the 25% tax bracket would take $1,000 of this, and inflation at 3% would consume $3,000. The net result is zero real gain.

Tea rule of 72 takes home the basics of investing, why you need to learn how to invest and get higher returns. Earning 3% a year the rule says that it takes about 24 years to double your money. At 10% per year, your money should double in about 7 years. Simply divide 72 by the interest rate or the rate of return to get the answer. For example, 72 divided by 10 equals 7 years (approximate).

Why learn to invest? Very simply, you won’t get higher rates of return unless you do. Let’s say you save $5,000 a year in an IRA that earns 3% interest for 30 years. After 30 years you have about $238,000. At 10% per year for 30 years, you’d have more than $822,000.

Here is a more extreme example to motivate you to learn to invest. Let’s say you transfer your $100,000 retirement plan assets to an IRA. At 3% over 30 years, it grows to about $243,000. At 15% over 30 years, your $100,000 increases to approximately $6,621,000.

Historically, over the long term, if safe liquid savings paid 3% per year, high-quality bonds yielded closer to 5% or 6%. US stocks returned a little over 10% annually. This is if you only bought and held stocks and/or bonds, without managing your investments.

People who really know how to invest and manage their investment portfolio can earn higher returns in the long run. The basics of investing are as follows: You must maintain a balanced portfolio of stocks and bonds and other investments.

Once you learn how to invest, you can earn higher returns at a level of financial risk that you are comfortable with. You can’t eat your cake and have it too. It’s all a tradeoff and it comes down to accepting some financial risk for higher returns.

Your financial security in retirement will likely depend on how you manage your financial assets. Do not hide. Learn to invest.