The Importance of Investing

Investing is a way to secure your future by setting aside a certain amount of money into something more than a bank account—something that has the potential to increase the original invested amount over time.

 

In other words, the money you put aside is used to generate more money. This is perhaps the most important wealth principal of them all. Investing is an important step towards financial freedom and independence. It means that once you put your money aside, it works for you and hence as years go by, you do not have to feel strained financially because you have several avenues of income.

 

Most people look at investing as something that only wealthy people partake in. However, it’s 100% possible to start investing in any amount, big or small. Making investments is a journey that begins with small steps. You need to start where you are, with what you have.

 

Some might say that a fundamental first step to investing should be to open a savings account. After all, money in a savings account is money you haven’t spent on other necessities (or frivolities) and will start generating a small amount of interest. However, this rate of interest—or growth—is extremely minimal. The only way to truly make your money grow is to invest it in an instrument that can generate a strong ROI (Return on Investment). This could mean stocks, bonds, mutual funds, retirement accounts (like a 401K or IRA)… or even cryptocurrency like Bitcoin, Ethereum, etc.

 

No one wants to struggle and live from pay check to pay check all their life. Investing is a great way to develop discipline to make the right sacrifices early on so that you can get to the point where you live a comfortable life. Investing allows you to avoid poor spending habits and helps in creating a balance between having a bit of fun in the way you spend money and putting enough aside to secure your future.

 

There are many ways to invest your money and one of the most common is by buying stocks. Investing is considered as a long-term plan that involves risks—including sometimes taking a loss. However, the long-term benefits generally outweigh the risks involved, and you can also take measures to mitigate risks as much as possible by diversifying your investments across many choices. For example, in buying stocks you have to look at companies that are stable and have the potential for growth.

 

Although you have to wait a relatively long time to make money from investing in stocks, you can sometimes earn annual dividends for holding the stock. Stocks will make your money work for you by enabling you to share in the growth of the companies you invest in. If you invested just $1,000 a year, with an average of 10% return annually, you could have over $1 million after 45 years.

 

You should explore multiple investment options because it is unwise to put all your money in a single investment. An individual retirement account (IRA) is another valuable way to invest. The IRA is a savings account that enables you to enjoy tax benefits and goes towards saving for retirement. Anyone with an income can open an IRA account. The fundamental requirement is that you are in a position to verify income and you can start putting money into your IRA account.

 

Buying property can be another way to invest. The good news is that you can use other forms of investment such as stocks to help you generate enough money to put towards buying a home. Owning a home is a liberating step in life, allowing you to build equity over the long haul.

 

Cryptocurrency is currently a trending form of investment that many people are looking into. Although alternative currency such as Bitcoin and Etherium has been around for a long time, the trend has caught on in recent years. In 2017, the value of the Bitcoin rose from $800 to over $15,000. Compared to stocks, investing in Cryptocurrency is a bit more unpredictable, but the potential upside can be enormous since it is still very much an emerging technology.

 

Investing early will put you ahead of everyone else and you do not have to compete so hard for opportunities. It will also allow you to earn money from multiple avenues thus giving you options to live a better life. Besides, in case of emergencies, as are common in life, you will have put away money to help you get through the rough times.

 

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