On paper investing sounds easy, just put your money somewhere, cross your fingers, and hope to earn a profit. Just a quick view of the news will prove exactly the opposite. Investing can be tricky, confusing, and may actually cost you money in the long run. Despite the negative aspects of investing, everyone should take the time and effort to make their money work for them. Here are the top 5 reasons you should be investing:
- To Hedge Inflation: The historic inflation rate is 3% annually, meaning that the $1 you earn today will only be worth .97 at the same time next year. If you only put your money into an interest bearing savings account, the rate of return may not stand up to the inflation rate, thus making your money less valuable as time goes on. By diversifying your portfolio and following proper investment strategies, you can not only make your money keep pace with inflation, but you can actually make it more valuable than what you originally anticipated.
- Retirement: Do you love your job so much that you want to work at it forever? Even if you say yes now, chances are that when you are 85 years old you may wish that you had a time machine so you can come back and warn your younger self. In the future you have two options for revenue, you can keep on working and earning a paycheck or you can make your money work for you so you do not have to anymore. Investing is the only way to make that happen.
- Improve your Standard of Living: No two people have the same financial goals, but everyone deserves to have a good quality of life and a decent standard of living. By taking the extra money you have now and investing it, you can build a nest egg to buy your dream house, take cruise around the world or buy a new car. Whatever your goal, by investing your money to earn more money, you can help build a sizable asset to fund your dreams.
- Peace of Mind: Living paycheck to paycheck is not conducive to one’s mental health as the stress waiting for the next paycheck to come may be to much to handle. By saving a little at a time and investing that extra money, you will be able to build a safety net for yourself in regards to your financial well being. Even by investing small amounts faithfully, over time you will end up with a nest egg that will provide you with some cushioning when and if you need it,
- Tax Breaks: Paying taxes is inevitable, but by investing into your retirement account, you will have less taxable income and have to pay less to the Government come April 15 of every year.