Interestingly, many people are not educated about the importance of investing. Most are afraid to talk about investment opportunities because of they are fearful of the “risks” involved with investing. Perhaps you are one of them.
But did you know that you’re making investing decisions everyday?
Though they may be smaller in size, such as choosing a new pair of shoes or what to eat for dinner, these are still considered investments that can affect you in the future.
For example, choosing to buy cheaper shoes now might mean they will need to be replaced faster in the future than nicer shoes. Or, the foods you buy at the grocery could mean eating healthy or not eating healthy.
However, there is also a different, bigger type of investing that anyone can partake in–the sooner the better. In fact, it is encouraged that teenagers and young adults open up a savings account at their bank or start putting money away to be invested and compounded over time.
But, why? Why should you care about this sort of investment?
Here are 3 Main Benefits of Investing:
1. Make your money work for you
Even if you have a steady job or created a secondary income revenue, it is always good to make your money work even more for you in the future. Having money in the present is well and good, but spending it all at once can be irresponsible.
In this world there are two ways to earn income; one is to exchange you time for dollars. In other words, you work actively for your income. Eg: The salary you get from your job.
The other method is to have your money earn money for you. And this is where investing comes in.
In fact, this is a method which is commonly used by wealthy people.
See, when you keep all your money in a “savings” account, the interest you earn is not even enough to keep pace with inflation. So you need to figure a place to put your money to beat inflation by a substantial amount.
And investing is an excellent way to have your money work for you as your investments have the ability to help you earn compound interest. With compound interest, you earn interest on the money you save and on the interest that money earns. Over time, even a small amount of savings can add up to big money and help you achieve your financial goals.
Example: If you buy a $1 chocolate bar every day, you would have spent $365 a year. However, if you instead put the same $365 into a mutual fund that earns 5% a year, it would grow to $465.84 by the end of five years. And after 30 years, you would have $1,577.50, which is more than 4 times the money which you invested initially.
That’s the power of “compounding.”
2. Builds a safety net for you and your family
Unexpected events do happen. Sudden retrenchment, accidents, vehicle breakdown & repair etc. do happen all the time and when they occur, the first thing that you’ll need to help you tide through the situation is money.
And that’s when your investments will come in handy.
Though it’s best to let investment money sit and accrue, they can also be tapped into when those emergencies in life are inevitable.
All in all, investing brings a peace of mind that you have a “safety net” building or already built.
Let me give you an example. A sudden retrenchment from your job will cost your active income to fall to zero. If you have problems finding another job, the bills, mortgages etc. will become a heavy burden to you and the amount will just snowball and weigh down on you. However, if you already have an investment that is able to pay dividends/rental yield that is sufficient to meet your daily needs until you find another job, you’ll free yourself of the stress & anxiety you’re faced with.
3. Create a better life for you and your loved ones.
Money can be a big part of stress at any age, but using your money in a responsible manner and making it work for you means you can have that nice car, house, and lifestyle you’re working hard for.
The thing about investments is that it provides you with the opportunity to reap in returns that can add on to your assets. You can start off with a small invesment in the right vehicle which requires some of your savings, but with patience and the right strategies, it can become a hefty investment.
“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” – Robert Kiyosaki
The amount you leave behind for future generations is entirely up to you. But remember that as your wealth accumulates, you’ll be paving a better life for not only yourself but your loved ones. Imagine your family having the ability to have a comfortable home, go on vacations and simply spend more time together. Won’t it be worth investing whatever time & money you have right now to create such a wonderful future?
The thing is, it’s definitely possible with the right investment vehicle & strategies.
So hopefully after reading this article, you’ll understand the benefits of investing and will seek to invest your money wisely to generate huge returns for yourself!
Do you think investing is important?
Share your thoughts by leaving a comment below!