What is investing?
Before we discuss reasons to invest, let us define what investing is. According to textbook definition, investing is expending money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property, or by using it to develop a commercial venture but simply put it is allocating money now to earn you income later. In a way it is the way we manifest our discovery of the future and take advantage of this knowledge. It shares a similar attribute with saving that it lets us share what we have now with our future selves. Here, we will discuss why saving is not enough and why you need to start investing.
The rate of inflation beats whatever interest banks give you so while you think that your money is sleeping safe and sound in the bank, it is actually losing purchasing power. A hundred pesos before could buy more than a hundred pesos today and a hundred pesos today will be able to buy more than a hundred in the future (consider 10 years). Investing is perhaps the only viable solution to get your money to outgrow the devaluation of money.
To Afford the Wants
If you’re like most people, you earn a fixed amount of monthly salary. The sad reality is most of salary earners will not be able to afford good houses if they depended on their salary alone as a source of income. Investments allow you to have other sources of income without necessarily demanding too much of your time and effort.
Prepare for Retirement
If you’re like me, you’d want to retire early. For me, my target age is 45. It would be even better if I could do it earlier. We work to live not live to work. If ever I will work after the target retirement age, it shouldn’t be because I have to but because I want to. An early retirement or even just a comfortable retirement is possible only if you have the financial means not to work and still have money to spend. This is made feasible by investments in assets that can earn sufficient passive income to sustain the lifestyle you desire after retirement
Leave a Legacy
Some of us may also have dreams of leaving something behind that would outlast them. Perhaps it’s founding a charitable organization to help educate people. It could be as ambitious as starting the next Microsoft. Or it could be as modest as just ensuring that your family has enough to help them work on their own dreams. Whatever that legacy is that you want to leave behind, there is no doubt that investing in some asset will be vital in achieving that goal.
I hope you’re hyped to get started investing. In previous articles we have been telling you that we’d have an article that would discuss different investment options. So let’s strike the metal while it’s hot. Today we’ve uploaded not just one but two articles. Click here to read our article which discusses 9 Investment vehicles.
If you’re ready to start investing, fill out our request form and schedule an appointment with a financial advisor.
Earl Wong, a magician, educator, and entrepreneur. He has dedicated his time and effort to creating educational materials with a sprinkle of magic. He is also a financial advisor which allows him to personally spread financial literacy.