When it comes to our finances, most of us are risk-averse. We’d rather have a little bit of security and certainty in our lives than go for the gusto and hope that everything works out.
It’s no wonder, then, that people are often hesitant to invest their hard-earned money. After all, there is always the chance that you could lose everything you put in.
But what if I told you that investing isn’t as risky as you think? In fact, over the long term, it can be one of the smartest things you can do for yourself and your future.
Here are five reasons why you should consider investing your money:
1. Investing can help you reach your financial goals
If you have any kind of financial goal – whether it’s buying a house, saving for retirement, or anything else – investing can help you get there faster.
How does investing do this? Well, when you invest in something like stocks or mutual funds, you’re essentially putting your money into an account that has the potential to grow over time. The longer you leave your money in the account, the more time it has to grow.
For example, let’s say you have a goal of saving $500,000 for retirement. If you start saving when you’re 25 and put away $5,000 per year, you’ll reach your goal by the time you’re 67.
But if you start investing that same $5,000 per year and earn an average annual return of 7%, you’ll reach your goal by the time you’re 60. That’s seven years sooner!
2. Investing can help you beat inflation
Inflation is a sneaky little thief. It erodes the purchasing power of our money over time, which means that $100 today won’t buy as much 10 or 20 years from now.
For example, according to the Bureau of Labor Statistics, the cost of living has increased by about 3% per year over the last 10 years. That means that something that cost $100 10 years ago would cost you about $133 today.
Investing can help you keep up with – and even beat – inflation. When you invest in stocks or mutual funds, you’re essentially buying a piece of a company that will (hopefully) grow over time. As the company grows, so does the value of your investment.
3. Investing can help you build wealth
If you want to become wealthy, investing is one of the best ways to do it. While there are no guarantees when it comes to investing, over the long term, it has proven to be one of the most effective wealth-building strategies out there.
Consider this: If you had invested $10,000 in the stock market 30 years ago, your investment would be worth about $500,000 today.
Of course, you don’t have to wait 30 years to start seeing the benefits of investing. The sooner you start, the sooner your money will have a chance to grow.
4. Investing can provide peace of mind
Investing isn’t just about making money – it’s also about giving yourself peace of mind. When you invest, you’re essentially putting your money into something that has the potential to grow over time. This can help reduce stress and give you a sense of security about your future.
5. Investing can be easy
Contrary to what you may think, investing doesn’t have to be complicated. In fact, there are a number of ways to get started that are relatively simple and easy to understand.
If you’re not sure where to begin, consider checking out our free resources such as:
- Our free Checklist of what we consider the 10 Must-Have Stock Criteria for any stock we’re thinking about investing in
- Our free 90-minute Online Masterclass, where we show you the ropes to get started with tools you can immediately start practising during the session
The Bottom Line
Investing is one of the smartest things you can do for yourself and your future. It can help you reach your financial goals, beat inflation, build wealth, and provide peace of mind. And it doesn’t have to be complicated – there are a number of easy ways to get started.
The bottom line is that investing is a smart move – one that can pay off handsomely in the years to come. So if you’re not already investing, now is the time to start.