Let’s talk about why you should be investing.
Studies show that keeping your money saved in a bank account over time decreases the value of your dollars. This is mainly due to inflation. Inflation on average increases at about 3% a year.
In 2021 alone it is expected to exceed 4%. According to CNBC currently the average savings account earns an annual percentage yield of around 0.006%.
Which in turn means that your money is losing its value year after year if it is not beating inflation.
Invest Like The Rich and Wealthy
Therefore, many of the rich and wealthy preach on investing! People have made fortunes when it comes to investing. When people invest their money, they are giving their money an opportunity to grow.
A study from Nerdwallet shows that the average stock market return is about 10% per year. That translates to your money beating inflation and continuing to be worth more as the years pass on by.
People such as janitors have been able to retire multi-millionaires simply from just investing much of their money.
Reduce Risky Investing
But isn’t investing risky? Yes, there is risk involved in investing, money can go down, but it also can go back up. It is all part of the game but if you invest smartly and for long-term, you should still on average beat inflation rates.
Many experts teach to buy and hold onto stocks for long periods of time. Imagine buying Amazon stock for $12 in 2001 and selling it a few months later because it dipped down to $10. As of me writing this post, 20 years from 2001 Amazon stock is worth over $3300. It is important to not get emotional when things start to look bad for stocks.
Investing can take the shape of many different forms. From buying individual stocks, to investing in mutual funds, retirement accounts or even real estate.
Do Your Investing Research
Before you get started investing, make sure to do your research on what is the best to get started for you. I say this because some investment options provide more risk than others.
If you are younger and don’t have a lot of responsibilities, then maybe you can investigate more riskier investments as opposed to someone closer to retirement.
Investing is a sure way to make your money work hard for you. You will make more money investing consistently over the years than you will be saving.
That’s not to say you shouldn’t have a savings account for emergencies or for near term big purchases. Investing is a vehicle towards building wealth.
Beauty in Compounding
Another benefit that comes from investing is called compounding. This is when the money you have invested, makes you more money and that money gained gets re-invested making you even more money.
You won’t see that in a traditional savings account.
They say to invest early and invest often! Essentially if you want to build long term wealth you just need to be investing, plain and simple.
If you do nothing extra to make more money, at least invest it consistently. Find ways to put more money into your investments, just like planting, the more you water your accounts the more they will grow.
People complain that life is short, which in some context yes that’s agreeable. But life can also be long. Don’t get to retirement age and not have any investable assets.
The goal is to be able to retire off your investments. Eventually if you’re consistent for long enough your investments will get to a point where it is paying you more of a salary each year and you can live off that and not work.
Although it may take some time, you cannot afford not to invest your money. Start early, start today, start now!