Investing early can pay big dividends. If you don’t believe me, check out this example of two teenage friends who started investing just a few years apart. Despite investing less money, the friend who started investing seven years earlier ended up with a significant amount more!
And just in case you are sitting there thinking I don’t need to invest my money here are some reasons why you should start investing, and make your money work harder. So without further ado, let’s look at eight reasons to invest:
1. Investing Makes Your Money Work for You
To earn more income, there are two ways to make money; either you work for your money, or your money works for you. Instead of frittering away your cash, or keeping it in a bank account offering minimal interest rates, you can you can make more money or watch it grow by investing wisely.
Investing doesn’t typically bring large returns overnight, but if you are prepared to play the long game, there are rewards in store. It is better than your money decreasing in value over time, or worse still – being spent.
Particularly for us women, investing can be a great insurance policy against career breaks which can have a big impact on our earnings.
2. Invest to Beat inflation
Following on from the point above, it is an economic inevitability that the money you made yesterday will buy you less tomorrow, due to inflation. For that reason, it is essential that you make your money grow, and save it from being devoured by rising inflation.
3. Plant a Seed and Let It Grow
Smart people treat the money they have as capital and use it as a solid foundation to earn more money.
You can do the same by investing – whether in stocks, shares, bonds or otherwise – and use your money as a tool to build wealth, rather than simply earn it and then spend it. That is a cycle which is unlikely to prepare you for the future.
4. Plan your Retirement
While women typically live longer than men do, women also retire with less retirement income. If you choose not to invest, you will lose money to inflation and run out of money in retirement – do you need any more reasons to invest?!
Retirement is a time to enjoy the fruits of your hard work not scrimping and saving, and it starts with investing now.
For this reason, it is wise to allow your money to grow, so that when you retire, you have a satisfactory pot of money with which to enjoy your later years.
5. Makes Your Financial Goal Easier to Achieve
We all have goals in life, and some of them are inevitably dependent on finance – be they a car, a house, that dream holiday you have always wanted or financial freedom.
While investing might mean you cannot spend money right now, if you set your mind to achieving a goal, it can allow you to get there more quickly by your target date. Investing can help you achieve your goals faster with a useful combination of patience and time.
6. Look to the Long-Term
Following on from the point above, there is a lot to be said for long-term thinking. ‘Rome wasn’t built in a day’, so the saying goes, so you can set your sights on a long-term ambition and steadily work towards it, watching your money grow after you have invested it wisely.
If you get into the habit of working towards future goals, rather than taking the ‘quick fix’ in life, you will be amazed what it can do for your finances, mental discipline and strength.
7. Not Investing Your Money is the Biggest Risk
Think about it – investing represents a risk, as we all know – but the consequences of not investing could be even more serious. So, in the long run, taking a risk now could actually represent less of a risk than not risking anything at all!
You should not let your money sit idle. The best thing you can do is research a wide range of investments, and then pick the one which matches your values and long-term objectives.
8. Tax Benefits Are Reasons to Invest Too!
There are plenty of ways which you can invest and tap into tax benefits at the same time.
Take stocks & shares ISAs and cash ISAs or Individual Savings Accounts, for example – these are government backed accounts which are some of the securest you can sign up for, and they are also tax efficient, which means you can enjoy healthier returns than from a large share of standard bank accounts.
That’s a run through eight reasons to invest, and you can also invest your time wisely, by doing some research on the different investment options available to you.
Don’t rush into anything, but remember that the longer you leave your money sitting idle, the less time you have to see your money grow and build wealth.
Investing can throw up many choices and huge opportunities, but it is better to get on the right path now, rather than leave it too late.
This article is part of our Investing Series, to be followed by more interesting facts, smart practices, advice and suggestions. Why not join us so you do not miss any post in this series to learn more on a subject that has a much better performance yield than the lottery?
Are you investing? What are your reasons for investing? We’d love to hear from you in the comments below!
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